Lately, we could notice an increase in Bitcoin price that wasn’t seen since 2017. The growth of the hush rate (up to July 1st exceeded 69 quintillions of hashes) again awakened a massive interest in the world’s most famous cryptocurrency, as well as for resolving the legal status of the industry.
A new wave of interest has led to new regulatory moves that prove that legislation around the world still has an impact on the legal use of the cryptocurrency. Bitcoin mining space had huge ups and downs in the last two years, going through the depths of a modest and harsh environment for the entire crypto area.
Growing Hash Rate
According to data provided by analytics, the bit rate is continuously increasing over the past six months for Bitcoin. These are good news for bitcoin miners, despite the many legal pressures underlying the mining ecosystem.
The major obstacles were the volatility of prices and legal status. To remind, last month, the legislation in Iran banned the crypto mining for several mining entities. This pressure on mining crypto can have a more profound impact on countries that have extensive active mining and mining-friendly regulation.
Crypto mining in different countries of the world
Over the years, China has taken a firm stand on the legal status of cryptocurrencies. The Chinese government banned Bitcoin trading, the initial coin offers (ICO) and crypto exchange.
However, Bitcoin mining in China has one of the leading roles in the global hash rate, because, about 70% of all coins created annually are derived in China. The country has a dominant role in mining, evidently. The reason is the massive excess of electricity in the country, especially in the province of Sichuan. Due to the surge of power, energy producers are encouraging companies to launch mining operations in order to take advantage of unused resources.
The government agency lobbies not to provide a legal space for crypto mining due to the lack of tax compensation from the mining industry and, of course, the effort to preserve the environment.
However, if the proposed documents from April 2019 really came true, they could have slammed the dominance of China’s Bitcoin mining. It would not be a little good for huge players such as Batman, the largest producer of mining ASIC in the world, and it’s just located in this country.
Compared to China, Russia has a more accessible entrance to Bitcoin and cryptocurrencies. Even if there has been a lot of talking about it for a long time, Russia has no definitive regulatory attitude to the crypto industry, yet. By the end of 2019, the law on digital financial assets is expected to enter into force, which will regulate the legal status of the cryptocurrency and change the position of Bitcoin, which is still an illegal payment facility in this country.
Again, cold climate and cheap electricity always lead crypto mining to Russia. However, mining operators could face penalties in the future.
One of the high officials of the State Duma told local media that cryptocurrencies created on open blocks are not legal. He also emphasized that it was not illegal to keep Bitcoin in Russia regardless of whether it was purchased or procured in the country.
Due to the considerable increase in electricity consumption in the past month, the government of this country has banned mining activity until a more precise legal regulation is introduced that will legally increase the cost of electricity for bitcoin miners. The government of this country believes that crypto mining is just behind an unbalanced increase in electricity consumption of 7%.
The mining ecosystem received a legal stamp of approval in September 2018, after numerous Iranian government departments officially accepted crypto mining insurrection as the legal industry in the country. It needs to be kept under the framework of adequate legislation.
However, due to the latest exposure, Iran’s miners will have to endure several months of uncertainty until the government approves new tariffs for electricity.
Canada is a crypto-friendly country that provides opportunities for legal operations of mining cryptocurrencies. The main thing here is in taxation. Bitcoin is classified as a commodity, and a tax for it is also determined, depending on how they acquire and use the cryptocurrency. If it is a legal income, it is taxed as such, and if it is held as an investment property, it is obliged to pay the capital gains tax.
And while trade and possession in Canada mostly have an entrance to the big door, this northern country is best known for the legal exploration of mining. The main reason for this is the work of the electricity supplier Hydro-Quebec and the Canadian government regulatory energy agency called Regie de l’energie. Last year, the provincial government of Quebec lifted a moratorium on the sale of electricity to crypts. More than 100 potential mining operations have been used to purchase energy from Hydro-Quebec with reported energy consumption of more than ten terraces per hour. The company launches 60 hydropower plants, which at that time produced a surplus of around 13 TVh.
Within a few months, the energy supplier had to stop the processing of miners’ requests due to the high demand of the industry, which exceeded the electricity supply at that time. In April 2019, Regie de l’energie released new rules for the sector that virtually shut down the process of cryptocurrency miners to gain access to electricity.
The Canadian energy supplier was ordered to allocate 300 megawatts to the blockchain industry above 158 MV already provided to its existing customers, along with 210 MW supplied by municipal distributors. To gain access to that allocated energy, mining companies must pass the selection process. The main principles include created jobs, payroll list of these jobs, investment value, as well as heat return.
Regarding the countries mentioned above, the Czech Republic may act as a small player, but it is certainly worth mentioning. Here is Slushpool, one of the largest mining basins in the world that makes up 7.5% of the total distribution of hash rates. The Czech Republic is somewhat relaxed in terms of the legal status of Bitcoin and the cryptocurrencies in general.
It can be said that Iceland becomes the center for legal crypto mining, given its cold climate and the abundance of renewable energy sources. In February last year, it was expected that the use of electricity would exceed the total amount of energy used by households in the whole country. Genesis Mining has been declared the largest consumer of energy in Iceland.
Crypto mining on the North American soil was also followed by a pragmatic regulatory approach. As of 2015, the US Trade Commodity Futures Trade Union ranked Bitcoin as a commodity, and the legal status of the cryptocurrency has remained unchanged so far. There are no specific limitations for mining activity, while several countries have taken different lines of access to cryptos in general.
Crypto mining as a global phenomenon
Crypto mining has become a global phenomenon. According to the geographical positions of these countries and the resources they possess, it is clear that the main factors for the development are the climate and availability of affordable electricity.
When the mining pool is growing, Bitcoin mining requires the use of higher power. This means that mining could potentially use more energy over time.
At the end of 2018, the study showed that total electricity consumption in global mining of cryptocurrencies outperformed the exploitation of mineral resources. This leads to a great deal of public concern and questions the legal status of the industry.
Still, the good news is that even 74% of Bitcoin mining is running on renewable energy. It is clear that this will continue to be one of the burning issues with the efforts to implement the highest technology on a global scale and introduce cryptocurrencies into legal flows, covered by adequate statutory regulations and satisfactory environmental standards.