Bitcoin miners in Nordic region get a boost from cheap power | Mint
The wettest weather in at least 20 years boosted output from hydroelectric plants, leaving Sweden and Norway with some of the lowest energy prices in the world. The resulting glut of the most important raw material for making virtual currencies coincided with a year in which the price of bitcoin tripled.
Coins are manufactured on giant computer farms that process complex algorithms in rooms as large as airport hangars. That makes electricity one of the key inputs, with operations sometimes consuming as much energy as 70,000 homes use. Current market dynamics provide large miners with alternatives to places where bitcoins are normally created, such as China, Kazakhstan, and Canada.
Reading: Bitcoin nordic region get boost cheap
its luck is due to several years of low margins due to higher electricity costs and lower prices for most virtual currencies. Many of the miners who were drawn to the region during the last rally in 2017 have left.
“those who survived the difficult period, like us, are now quite happy,” said philip salter, chief operating officer of hong kong-based genesis mining ltd., which operates a data center in boden, sweden. “There were times when we didn’t make any profit at all, but over the last year our profitability has more than tripled.”
Unusually wet weather coupled with mild temperatures boosted hydroelectric dams in the Nordic region to the highest level in more than 20 years, leaving the area awash in generating capacity. the result is energy prices close to zero for prolonged periods. Average prices this year are about a third of those in Germany, Europe’s largest energy market.
See also: Best Bitcoin Casinos & Crypto Gambling Sites Of 2022
norway had the lowest electricity prices for industrial users last year among the 30 member nations of the international energy agency. It also had the lowest non-domestic prices in the European Union during the first half of this year, narrowly beating Iceland, another cryptocurrency hot spot.
“these prices are some of the lowest that can be found in the world if tariffs and taxes are not taken into account,” said tor reier lilleholt, head of research at norwegian consultancy wattsight as. “What we saw this summer was low levels recorded for so long.”
The main environmental benefit of basing mining in the Nordic region is that electricity is nearly carbon-free, consisting primarily of hydro, nuclear, and wind power. that is becoming increasingly important to the many institutional investors attracted to cryptocurrencies and one of the main factors behind the latest price surge. having coins flowing from the Nordic region helps reduce bitcoin’s political risk profile.
“there is a very important strategic shift from mining in china to mining in western countries like sweden as bitcoin investors become more public and want more stability and critical security,” said salter at genesis. “it’s one of the biggest developments in bitcoin mining to watch out for.”
Electricity prices around the world are difficult to compare, as they vary between industries and regions due to taxes, fees, and subsidies. An attempt by the World Bank, which measures bills from an imaginary warehouse in each nation’s capital, puts Sweden and Norway well below China but above other cryptocurrency manufacturing hubs such as Kazakhstan and Mongolia.
See also: Why investors should connect Marketech Focus and Sharesight
The cost of energy is about to become even more significant for miners. the hash rate, the amount of computation needed to produce each coin, is constantly increasing. and in May, miner rewards were cut in half, a reduction in the number of tokens they receive as a way to maintain scarcity.
many of the miners who left the region after the boom and bust of 2017-18 could return. The November announcement of a $35 million investment by Dutch blockchain company bitfury holding bv to expand its Norwegian site could mark the start of a new trend.
“We’ve seen a noticeable increase in investor appetite for bitcoin mining opportunities in Norway,” said Tyler Page, a business developer at Bitfury. “This year’s energy prices were particularly low as bitcoin prices have risen.”
To see more articles like this, visit us at bloomberg.com
©2020 bloomberg l.p.
This story is published from a news agency feed with no changes to the text.
See also: El Salvador explores bitcoin mining powered by volcanoes | AP News