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Mining is one of the primary methods to generate a profit in the cryptocurrency industry and is considered by many as one of the more lucrative mechanisms in the market if done correctly. These gains depend on different factors which we will analyze in the following guide.
Before getting started, check out this interesting article by Remitano:
What Is cryptocurrency mining?
Cryptocurrency mining consists of a cluster of computers on a global scale. Each computer competes with each other to solve a mathematical problem, which is specified in the creation of a block in a blockchain network of a certain cryptocurrency.
It is important to note that the greater the computing power, the greater the chances of mining a block, and, accordingly, of obtaining the commission reward stipulated in the protocol of said cryptocurrency.
For this reason, today we can find various modalities to mine cryptocurrencies, among which pools and cryptocurrency mining farms stand out.
It should be noted that each cryptocurrency platform has its own protocol or mining system, but we shall name only the best-known ones for the purpose of this article:
- Bitcoin works under the Proof of Work (PoW) protocol and its units can only be mined through ASIC mining hardware.
For more on this, please read 3 Best Bitcoin Mining Machines.
- Ethereum also works under the PoW protocol, but unlike Bitcoin, it works through a system known as RIG, which basically consists of mining cryptocurrencies through VGA video graphics cards.
Dive deeper with the following article: 7 easy ways to earn free Ethereum in 2020.
Factors affecting the profitability of a cryptocurrency mining business:
- Property ownership: Legal security of the property in which the mining is done.
- Electricity costs: cost of the electricity needed to mine the cryptocurrency.
- Internet speed: the faster the internet speed, the more blocks one can mine.
- Climate conditions: the cooler the weather, the easier it is to keep the mining equipment cool, thus requiring less electricity to keep said equipment cool.
Based on these characteristics, here are the ten best countries in the world to mine cryptocurrencies:
This beautiful country located in Northeast Europe occupies the tenth position because it maintains a balanced standard among the measurement factors that have been taken into consideration in this article:
- Latvia accumulated 72 points in the 2020 Property Law Index.
- The country’s commercial electricity rate is USD 0.18 per kWh.
- In terms of Internet speed, Latvia occupies a very good position worldwide, with download speeds as high as 32.74 Mbps, coming in at 16th place globally.
- Latvia has an average annual temperature of 5.65 degrees Celsius, which is quite generous in helping to cool down the digital mining equipment.
As an interesting final piece of information, the Latvian government recognizes cryptocurrencies and approves of them, though it also collects taxes on such assets.
Together with Japan and Malta, Switzerland is one of the countries with the best policies for crypto-Cosmo entrepreneurs. Most of its indicators are nearly perfect, and if its energy cost had been lowered it would be in the first position:
- Switzerland accumulated 87 points in the 2020 Property Law Index.
- The cost of commercial (non-domestic) electrical service in Switzerland is $0.21 per kWh.
- Switzerland has excellent internet download speeds of 38.85 Mbps. In this line, Switzerland is in the ninth position worldwide.
- Switzerland has an annual average temperature of 5.50 degrees Celsius, quite generous in contributing to the cooling of digital mining equipment.
Georgia is another one of the most crypto- and blockchain technology-friendly countries. However, there are other qualities that lead it to occupy the eighth position in this ranking of the best countries to mine cryptocurrencies that we will outline below, the most outstanding being the cost of electric energy:
- Georgia accumulated 69 points in the 2020 Property Law Index.
- The cost of commercial (non-domestic) electric service in Georgia is an incredible $ 0.06 per kWh, without a doubt, the lowest in this ranking.
- In contrast, Georgia’s internet download speed is not the highest, but it is still not negligible at 7.14 Mbps. In this line, Georgia is located at 88th position worldwide.
- Georgia has an average annual temperature of 5.80 degrees Celsius, quite generous in contributing to the cooling of digital mining equipment.
Estonia is also on the list of the friendliest countries for decentralized cryptocurrencies, not to mention that it has created an entire online government ecosystem.
The most interesting thing about the e-government initiative is that it’s not only aimed at native Estonian citizens, but also international entrepreneurs. All this through laws and policies that promote legal and proprietary security for entrepreneurs.
“Many entrepreneurs move their blockchain businesses to Estonia due to existing cryptocurrency regulations. The favorable tax regime and ease of doing business means that more than 700 cryptocurrency and blockchain companies with foreign shareholders are directing their blockchain businesses to this country,” said Dmitri Lihno, director of the branch of Private Financial Services in Estonia.
As if this were not enough Estonia has quite favorable indicators to exercise cryptocurrency mining:
- Estonia accumulated 83 points in the 2020 Property Law Index.
- The cost of commercial (non-domestic) electrical service in Estonia is $ 0.17 per kWh.
- Estonia has an excellent internet download speed with 31.55 Mbps, thus ranking 18th in the world.
- Estonia has an average annual temperature of 5.10 degrees Celsius, quite generous in contributing to the cooling of digital mining equipment.
This North American country is located in the present list because it is the place with the best climatic conditions to refrigerate mining equipment and a fairly reasonable electricity rate. Likewise, cryptocurrency mining is a legal activity and it is a democratic nation that respects the principles of private property.
- Canada accumulated about 88 points in the 2020 Property Law Index, occupying the eighth position worldwide, which is fantastic.
- The cost of commercial (non-domestic) electrical service in Canada is $ 0.10 per kWh.
- Canada has a good internet download speed of 28.76 Mbps, thus ranking 25th worldwide.
- Canada has an average annual temperature of -5.35 degrees Celsius, undoubtedly the best on this list to cool digital mining equipment.
In general, Finland brings together conditions conducive to cryptocurrency mining, cryptocurrencies are considered legal although not as currency, but as financial contracts, and cryptocurrency mining is fully accepted.
Here are the excellent indicators for Finland:
- Finland accumulates 92 points in the 2020 Property Law Index, occupying the fantastic fourth position worldwide.
- The cost of commercial (non-domestic) electrical service in Finland is $ 0.07 per kWh.
- The internet download speed is very good at 29.34 Mbps, thus ranking 24th worldwide.
- Finlandia has an average annual temperature of 2.10 degrees Celsius, one of the best in the world for cooling digital mining equipment.
It is one of the countries in the world with the largest number of digital mining farms, and this Nordic country has almost perfect characteristics for this activity. Besides complying with all these factors, Iceland has almost unlimited energy reserves under its territory.
This small country has several geothermal power plants that use naturally super-hot water vapor to power turbines that create gigantic amounts of cheap electricity.
- Iceland accumulates 88 points in the 2020 Property Law Index, occupying the ninth position worldwide.
- The cost of commercial (non-domestic) electrical service in Iceland is $ 0.12 per kWh.
- The internet download speed is good with 22.13 Mbps, thus ranking 35th worldwide.
- Iceland has an average annual temperature of 1.75 degrees Celsius, one of the best in the world for the cooling of digital mining equipment.
This beautiful country, apart from having ideal conditions to mine cryptocurrencies, has an element that makes it even more attractive. The Danish government does not charge taxes for the trade or extraction of cryptocurrencies. This is because even while the Danish National Bank does not consider cryptocurrencies to be legal tender, it does not prohibit their use or extraction, which is why many cryptocurrency miners have made Denmark their home.
- Denmark accumulates 86 points in the 2020 Property Law Index, ranking 16th worldwide.
- The cost of commercial (non-domestic) electrical service in Denmark is $ 0.069 per kWh.
- The internet download speed in Denmark is among the best in the world with 49.19 Mbps, thus ranking in the fabulous fifth place worldwide.
- Denmark has an annual average temperature of 7.50 degrees Celsius.
The Norwegian government stated in February 2017 that it would not impose taxes on the purchase or sale of Bitcoin. Furthermore, the Norwegian Tax Administration does not define cryptocurrencies as money but as a digital asset. Despite this, it is very safe to trade and mine cryptocurrencies in this Nordic nation.
- Norway accumulates 84 points in the 2020 Property Law Index, occupying the 20th position worldwide.
- The cost of commercial (non-domestic) electrical service in Norway is $ 0.07 per kWh.
- The internet download speed in Norway is among the best in the world at 38.46 Mbps, thus ranking 11th worldwide.
- Norway has an annual average temperature of 1.50 degrees Celsius, ideal for cooling digital mining equipment.
The Swedish jurisdiction is generally quite favorable towards cryptocurrency companies and users compared to other countries within the EU and the rest of the world.
The government regulatory and supervisory body of the Swedish Financial Supervisory Authority (Finansinspektionen) has legitimized the fast-growing industry by publicly proclaiming Bitcoin and other digital currencies as a means of payment.
For cryptocurrency companies (mainly cryptocurrency exchanges) that interact with fiat money, the current regulation dictates that an application for approval or license must be submitted and all AML/CTF and KYC regulations applicable to more traditional financial service providers must be followed.
All this added to the fact that Sweden has the best indicators taken into account for this analysis makes it the best country in the world to mine cryptocurrencies.
- Sweden accumulates 89 points in the 2020 Property Law Index, occupying the seventh position worldwide.
- The cost of commercial (non-domestic) electrical service in Sweden is $ 0.065 per kWh.
- The internet download speed in Sweden is among the best in the world with 55.18 Mbps, thus ranking fourth in the world.
- Sweden has an annual average temperature of 2.10 degrees Celsius, a ninth position worldwide ideal for cooling digital mining equipment.
Note: Nations with anti-democratic governments or those where there is no legal security and respect for private properties were not taken into account, because mining cryptocurrencies under these scenarios will never be safe, such as in China, Russia, Belarus, and Venezuela.