It costs about $531 to mine just one Bitcoin in Venezuela, while in South Korea it costs about $26,170 to mine one Bitcoin, according to a new report.
The cost of mining matters because high energy bills quickly make Bitcoin mining a losing proposition.
As of this writing, one Bitcoin was valued at $9,500. One wonders why Koreans even bother.
Interestingly, Venezuela is the only country where mining is profitable at all at this point, given the price.
Bitcoin miners operate via an anonymous online process called blockchain mining. They use specialized computer hardware and computer chips to solve ever progressively difficult mathematical equation algorithms.
When a Bitcoin miner solves an equation, they are granted Bitcoins as a reward. The action is recorded on an online ledger. Successive equations become more difficult and thus increasingly energy-hungry.
The process also generates excessive amounts of heat, which can damage or destroy computer hardware and equation-calculating processors.
The Koreans might be taking the loss on expectations of a turnaround in the value of Bitcoin. Some early investors talk about $50,000 and $100,000 price targets.
The value of Bitcoins and cryptocurrencies in general fluctuate wildly. They are volatile and regularly experience significant valuation swings.
There are also the real-world considerations of economics and politics to consider for Bitcoin mining.
Bitcoin mining in Venezuela is cheap because of heavily state-subsidized energy costs. Energy is not cheap in reality. The government makes it cheap at a cost to the country’s coffers.
The Venezuelan advantage won’t last for long. The economy is failing outright. Authorities there have started to arrest anyone caught mining Bitcoins.
Ironically, Venezuela is launching its own, state-authorized cryptocurrency called a Petro. It will be economically backed by the country’s reserves of oil and natural resources.
Energy is not that expensive in South Korea. Yet the country has a sliding scale for energy costs, in order to discourage overconsumption.
That means that anyone who pays more than current average energy bill rates in the country will have to pay incrementally higher charges as usage increases.
Here what it costs to mine for Bitcoins worldwide:
Most Expensive Bitcoin Mining Countries
- South Korea $26,170
- Niue (Located Northeast of New Zealand) $17,556
- Bahrain $16,773
- Solomon Islands $16,209
- Cook Island $15,861
Least Expensive Bitcoin Mining Countries
- Venezuela $531
- Trinidad and Tobago $1,190
- Uzbekistan $1,788
- Ukraine $1,852
- Kuwait & Myanmar $1,983
The United States is the 40th cheapest country to mine for Bitcoins.