A crackdown by the Chinese government has begun an exodus of bitcoin miners towards foreign shores. (See also: China Intensifies Crackdown On Bitcoin Miners.) While bitcoin mining consumes large amounts of electricity, rising prices for the cryptocurrency have ensured that it remains a hugely profitable enterprise. (See also: High Bitcoin Prices Boost Profits For Miners In China.)
Bitcoin mining also has a positive effect on a country's economy. It plays an important role in reviving economies and providing employment in towns and cities that are not connected to economic nerve centers. For example, it has helped absorb surplus hydropower production in China’s Sichuan province and provides employment to workers in Inner Mongolia.
Here are three countries that stand to benefit from China’s decision to clamp down on bitcoin mining.
Canada fulfills most requirements for bitcoin mining. In addition to having cheap electricity, Canada also has naturally cold weather, which is essential to cool down overheated computer systems that mine bitcoin.
According to reports, Canada’s Quebec province is attracting miners. It produces a surplus of 100 terawatt hours of hydropower over 10 years. One terawatt is equal to a sustained power of 114 megawatts per year. 35 cryptocurrency mining organizations have asked for information from HydroQuebec, the local power company.
Bitmain, the world’s largest bitcoin mining company, is already in talks with Canadian authorities. David Vincent, director of business development at HydroQuebec, claims that the Canadian province has three or four of the world’s largest blockchain players. (See also: Who Is Jihan Wu And Does He Control Bitcoin Today?)
In recent times, Switzerland has set itself up as a destination for cryptocurrency initial coin offerings (ICOs). Now it is trying to attract bitcoin miners as well. Bitmain has set up a Swiss subsidiary in Zug, a small town, also known as Crypto Valley, in the country.
Switzerland is big on hydropower. But overall average electricity prices are on the higher side. That said, industrial users are offered discounted rates. In addition, the country’s moves to boost its reputation as an international destination for cryptocurrencies will also be boosted by the presence of bitcoin miners.
China’s loss could turn out to be the United States’ gain. Bitmain has already set up offices here. And Washington, a state with plenty of hydropower and cool temperatures, is witnessing a boom in bitcoin mining.
According to a CNBC report, a small town in Washington state is home to a dozen of the biggest bitcoin miners in the country and has received requests from 75 more. The proximity to bitcoin mines could also help reduce network latency at big cryptocurrency exchanges. This is because the more bitcoin nodes that are connected to a block, the faster transactions are processed and the less likely that an orphan block will be received.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin. It is unclear whether he owns other bitcoin forks.