While there are many places in the world that have the necessary infrastructure, cool temperatures, and educated workforce to support a crypto-mining operation, China has long been the destination of choice as a result of having the best combination of two key ingredients: cheap electricity and a lack of regulatory interference.
However, crypto-mining in China is far from ideal.
Over the last 5 years there have been numerous regulatory rumblings that have left crypto-miners concerned that their operations in China could come to a sudden end. The latest announcements out of China seem even more ominous than usual, and many crypto-miners are once again looking at alternative destinations for their operations.
While Canada and Iceland are frequently chosen alternatives to China, crypto-miners are increasingly looking to Eastern European countries. These countries have similar access to infrastructure, cool climates, educated workers, and cheap power as other popular locations, but more importantly they have or are moving toward outwardly friendly crypto policies.
Three of these Eastern European alternatives stand out above the rest.
Georgia
While no one can currently compete with the ultra-cheap power in certain Chinese regions, Georgia certainly ranks high as a low-cost alternative with rates as low as $0.05 to $0.06 per kWh.
However, Georgia has something that China and most other countries do not: explicitly crypto-friendly policies designed to draw major crypto-mining companies from abroad.
Georgia’s crypto-friendly attitude started during a close partnership with Bitfury, currently one of the biggest private mining pools for Bitcoin, when that company was looking to relocate a major share of its operations. Not only did this partnership produce the broader crypto-friendly policies that all crypto-miners in Georgia enjoy, but Bitfury also received a $10M loan and a large area of land for a nominal fee.
The current crypto-friendly policies in Georgia include:
- Special industrial zones
- No value added tax on mined cryptocurrency sold for fiat currency
- No taxes on electricity
Estonia
Crypto-miners may be flocking to Estonia because of its explicitly crypto-friendly policies, but there is a chance many would be heading that way anyway due to Estonia’s business-friendly policies in general.
Estonia’s business registration process is one of the quickest and least expensive in the world, including an innovative e-residency program that facilitates outside investment.
This business friendly attitude extends to the country’s regulators, who tend to take a hands-off approach as long as companies avoid outright criminal activities, such as money laundering.
Business and personal income taxes in Estonia are also some of the lowest in the developed world.
Combined with Estonia’s cool Baltic temperatures, educated and inexpensive labor, modern infrastructure and electricity rates of €0.09 per kWh, this all adds up to put the country on the map for crypto-miners seeking an alternative to China. Crypto-friendly policies help to push it into one of the top spots.
The current crypto-friendly policies in Estonia include:
- No value added tax on mined cryptocurrency sold for fiat currency
- No taxes on funds raised through ICOs
Russia
Not only does Russia have vast tracts of open land with subarctic temperatures, but thanks to massive Soviet-era investments many of these regions have modern urban infrastructure as well. In addition, thanks to the post-Soviet collapse, much of this infrastructure is currently unused or underutilized, just asking to be repurposed.
Massive Soviet investments in hydrocarbon extraction and exports and the post-Soviet reliance on these resources to fuel the economy mean some of the lowest energy prices in the world at $0.05 per kWh.
The only thing missing in this formula for crypto-mining success is a focus on crypto-friendly policies.
Unfortunately Russia has failed a few times to pass crypto-friendly laws, but the impetus for change is definitely there and does not look to be going away any time soon. President Putin himself has requested that crypto-friendly regulations be prepared for review some time around July of 2019.
Some of the suggested crypto-friendly policies for Russia include:
- State-funded industrial parks
- Subsidized energy prices
- Special access to hydroelectric plants
