Which countries will become the new mining hotspots, and where can Ether and Bitcoin be mined successfully — and profitably — in 2022?

One of the major topics of discussion in the crypto community in 2021 was China's strong approach towards mining, which culminated in a September ban on all mining activities.

While mining as a financial activity has not disappeared and is unlikely to do so, Chinese cryptocurrency miners were forced to relocate. Many of them relocated to the United States - the world's new mining mecca — while others settled in Scandinavia and neighbouring Kazakhstan, which offers inexpensive electricity.

Mining activities cannot remain hidden indefinitely, and governments worldwide have begun to express concern over electricity capacity and disruptions.

Erik Thedéen, vice-chair of the European Securities and Markets Authority and general director of the Swedish Financial Supervisory Authority, has urged for a ban on proof-of-work cryptocurrencies such as Bitcoin (BTC) mining in Europe.

As countries around the world begin to crack down on mining-related activity, the question becomes, "Where is mining crypto still viable and legal?"

North America

It's a well-known fact that the United States is the primary country for cryptocurrency mining, notably in the Lone Star State of Texas. Crypto miners and billions of dollars of money flocked into the southern state following the flight from China. This is partly due to state legislation, with Governor Greg Abbott promoting the Bitcoin business aggressively.

According to Philip Salter, CEO of crypto mining firm Genesis Digital Assets, the state became a favoured site for miners for several reasons:

"At the moment, Texas may be the most prominent site for miners worldwide. Its massive wind and solar energy resources have created a glut of economical energy. Privately controlled electricity networks ensure that new projects can proceed quickly, without being slowed down by bureaucracy. However, the benefits of Texas are not new. Miners began construction there years ago, albeit not as aggressively as presently."

Texas has its own electrical infrastructure issues, with huge blackouts striking a large portion of the state in 2021 due to unseasonable winter storms. However, miners in that region have been relatively conscientious about energy consumption, and large corporations have even switched off equipment on occasion to prioritise residential consumers and vital infrastructure.

Canada, America's northern neighbour, has been actively courting mining businesses as well. Alberta officials recently invited cryptocurrency miners to the province, highlighting the region's low electricity costs due to an abundance of local natural gas.

Latin America

Latin American countries have made significant efforts to attract miners, with El Salvador in particular demonstrating a positive stance towards mining. It was the world's first country to recognise Bitcoin as legal tender. The Salvadoran government has not shied away from direct investment in Bitcoin and even aims to develop a city dedicated to the leading cryptocurrency, powered by geothermal energy generated by volcanoes.

Costa Rica is also becoming more mining-friendly as a result of its low electricity prices. A hydroelectric power plant that was decommissioned during the COVID-19 pandemic has been restored thanks to mining.

Additionally, large cryptocurrency companies have begun to establish operations in Costa Rica. The Chia Network, a blockchain network founded by Bram Cohen of BitTorrent, has pledged to give technical support for Costa Rica's government climate change programmes.

Argentina was quite popular with miners until the government recently decided to reduce miner subsidies and increase taxes on mining activity. Thus far, these improvements in mining finance have been limited to the province of Tierra del Fuego, which is recognised for its frigid temperature. Argentina remains an attractive location for mining farms despite the increase in electricity prices, especially in light of the energy crisis in rival regions such as Europe.

In Europe, mining is still conceivable

Crypto mining operations in Europe remain relatively restricted, as high electricity prices associated with the energy crisis and policymakers' overall scepticism towards cryptocurrencies discourage crypto businesses from settling on the continent.

Indeed, Iceland was previously a hotbed of Bitcoin mining, thanks to its subarctic volcanic landscape, which provided cheap electricity and minimal cooling costs for mining facilities.

However, the country's national electricity utility, Landsvirkjun, reduced the amount of power it would offer to energy-intensive industries such as Bitcoin mining and aluminium smelting late last year, citing capacity problems.

Despite the continent's limits, there are a few locations in Europe where miners have chosen to establish operations where topography and climate play a significant role in luring industry.

Georgia, located in the Caucasus region, has benefited from a vast number of hydroelectric power plants established during the country's tenure as a Soviet republic, which, along with the country's comparatively small population, has supplied a significant amount of cheap electricity for miners.

Significant cryptocurrency mining businesses have already established operations in the nation. Bitfury, a Dutch mining firm, constructed its first data centre in the eastern Georgian city of Gori in 2014.

The success of Bitfury sparked the interest of a large number of Georgians, who began aggressively acquiring powerful video cards and establishing their own tiny crypto mining farms. The World Bank estimates that 5% of Georgia's population was involved in crypto mining in 2018.

Additionally, Russia remains a crypto mining powerhouse due to low energy prices and a frigid climate.

Andrei Loboda, public relations director at BitRiver, Russia's largest provider of cryptocurrency mining colocation services, discussed with Cointelegraph several specific places where miners will find it more convenient to operate if the Russian government becomes more supportive of cryptocurrencies:

"BitRiver estimates that over 300,000 individuals are currently mining Bitcoin in the Russian Federation alone. Our company has data centres in a number of Russian Federation regions, including the Irkutsk Region and the Krasnoyarsk Territory, where it performs energy-intensive, high-speed computing. The green and digital technologies we use in our work as part of the digital energy transition have already accelerated regional growth."

Is mining economically viable?

Geography is an important factor to consider for miners, whether it's for electricity and cooling costs or regulatory compliance. However, certain expenses, including as gear, will accompany miners wherever they go.

With increased demand for mining equipment and a recent market correction following the bull run of 2021, when is mining profitable given the associated hardware costs?

Since 2016, 2021 has been the most profitable year for mining Ether (ETH) using graphics processing units. This is unsurprising, given that the price of Ether nearly doubled last year. However, the primary concern for miners is electricity and equipment costs, which are increasing rapidly.

While profitability in Ether mining remains high, the payback period for equipment purchases is increasing, mainly as a result of the August 2021 London hard fork, which decreased the compensation for each block mined from 8–20 ETH to 2 ETH. Another disadvantage for miners will be the long-awaited transformation of the Ethereum blockchain to proof-of-stake consensus, which would require them to switch to altcoin mining or recertify as network stakers.

The Bitcoin network's mining difficulty just reached an all-time high, despite a sharp decline in the price of BTC in January, which reached a monthly low of roughly $34,300.

It's surprising that the cost of ASICs hasn't decreased in light of this. Simultaneously, the ASIC payment term this year is little more than 1,000 days, or nearly three years. Not everyone can afford to bear the costs for an extended period of time.

There are numerous changing elements that miners must consider, but one thing is certain: cryptocurrency mining is a fluid, adaptable sector, and firms have demonstrated their willingness to relocate to more advantageous areas if their current location proves less than optimal.

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