When people think of advanced technology, some countries always come to mind: the United States or Japan, for example. However, when we talk about countries that favor Bitcoin mining in the world, the answers are not always the most obvious.
Also, to establish the answers, the criteria are diverse. With that in mind, we have prepared a special article to let you know all about mining and the nations most compatible to do so.
In this post we will tackle the following questions:
- What is Bitcoin Mining?
- What are the most Bitcoin-mining countries in the world?
- What is the relationship between mining and energy consumption?
- What is the importance of Proof of Work?
1. What is Bitcoin Mining?
There are currently over 18 million Bitcoins in the world. This number changes every 10 minutes when new blocks are mined. In 2019, each instance adds 12.5 Bitcoins to the general circulation. In addition, another three million Bitcoins are on the waiting list. All of this work is made possible by a procedure known as mining. Which task-dedicated computers process highly complex mathematical equations.
This is done by using a program and all these procedures result in a reward: the virtual currency itself. Very succinctly, mining is the direct process of creating virtual currencies. The computers used must be powerful enough to perform all the thousands of calculations required in the operation.
These operations mainly serve to verify and validate transactions made with Bitcoin, thus preventing fraud. Each time the algorithm is solved by the machines, new blocks are added to the so-called Blockchain – a type of virtual ledger that guarantees the authenticity of transactions. The owner of the machines that solves the equation receives Bitcoins for the service provided.
2. What are the most Bitcoin-mining countries in the world?
For a country to stand out on this list, several factors are important. As we will see, having cheaper electricity rates is important, but it is not much use if there are no tax incentives. Countries plunged into political crises also push investors and potential partners away. Now, let’s show you which countries are most cost-effective for Bitcoin mining.
China is unquestionably the general leader in Bitcoin mining in the world. This is due to the low electricity rates. Moreover, there are several benefits offered by Chinese companies to others operating with cryptocurrency, such as directing the surplus produced to such facilities.
Thus, some of the largest mining companies and farms are located in this Asian country, such as the Dalian factory, one of the most famous in the world. It is estimated that the country controls about 70% of Bitcoin hashes in the world, which clearly shows the Chinese dominance in this regard – no wonder that this worries the US President Donald Trump himself.
With lower electricity taxes and a cryptocurrency enhancement policy, China is still the best option for mining Bitcoin today. The Chinese government has embraced this technology from the start and reaps the rewards with the modernization of the country.
One of the former Soviet Union’s countries, Georgia is increasingly consolidating itself as one of the nations that have mined the most Bitcoins. Like China, Georgia has cheap electric power, as well as a large number of manufacturers of equipment and chips dedicated to Bitcoin operations.
Furthermore, the country offers very attractive tax incentives for miners and cheaper land for machinery allocation. All of this culminated in a story from the largest newspaper in the world, the American New York Times.
As one of the major players in different areas of technology, it is only natural that the United States is one of the top three Bitcoin-mining nations in the world. This is also explained by the fact that the richest nation in the world is home to 21 Inc.
Headquartered in California, 21 Inc conducts large-scale mining. To get a better idea, about 3% of all Bitcoin operated in the world is in this company. And we are just talking about one of many based in the country.
Together, the three countries mine about 80% of BTC from around the world. Europe is also represented by nations such as Sweden and Iceland. In addition to tax incentives, the cold of the Nordic lands helps a lot in the conservation and maintenance of the servers.
3. What is the relationship between mining and energy consumption?
This work requires the use of high performance computers, which end up consuming a high level of electricity. So it’s easy to understand why some of the most Bitcoin-mining countries in the world are those that offer the cheapest tax incentives and tariffs.
In addition, to keep their operations running smoothly and their machines running optimally, users get a big advantage when other expenses, such as electricity, are reduced.
4. What is the importance of Proof of Work?
Also known as PoW, this mechanism requires specific proof that a given task has been accomplished. When we talk about Bitcoin, this work involves creating an authentic block to be added to the Blockchain.
Earlier in the article we mentioned the need for machines to solve complex mathematical equations to generate a reward. In PoW, we have a similar process and outcome: when one of the miners generates a new valid block, their computers develop a new data structure.
This new block contains some essential information, such as the valid transaction group and references to the previous data structure. But in order for this new block to be accepted by other computers connected to the network as truly authentic, it must be proved that the machines employed were able to solve the mathematical problem chosen by the cryptocurrency network.
So, every time a user can pass that test, he or she receives the reward in Bitcoins through the creation of a new valid block. Thus, Proof of Work is the ultimate validation so that the system is not circumvented – basically a fairly robust security standard dedicated to countering attacks and fraud.
As mining takes place through very high-end computers, the network becomes safer as the processing power. Coupled with PoW, makes operations increasingly secure. In this day, there is an incentive for more people to join the network and modernize more and more operations with virtual currencies.
Now that you know which Bitcoin-mining nations are in the world, it’s easier to decide where to operate. There are geographical options to suit all tastes, but each offers specific attractions and incentives.
Did you like the post and want to know more about virtual currencies? So follow us on social networks: we’re on Facebook, Instagram, LinkedIn and Twitter!!