A combination of cheap electricity and cold weather has started to draw a growing number of Japanese bitcoin miners to Mongolia, a country sandwiched between China to the south and Russia to the north. Amid falling mining revenues in other regions of the world due to the current crypto bear market, companies that have set up shop in Mongolia have found they can still run profitable mining operations.
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Business Environment Harsh But Mongolia Is Still Profitable
Tokyo-based e-wallet company Ginco is operating two mining farms in Ulaanbaatar, Mongolia’s capital city. One facility is located at an underground structure in a condominium complex .The company launched the business in October, a time when its peers throughout the world were considering winding down operations as a result of declining bitcoin prices, which rendered mining unprofitable.
Altogether, Ginco now operates 600 mining machines and is planning to increase that number to 1,000 units in this quarter. “The business environment is increasingly harsh, but we can still produce a profit,” Yuma Furubayashi, chief executive officer of Ginco Mongol, told Japanese publication Nikkei Asian Review on Jan. 11.
The market has been unforgiving for companies involved in cryptocurrency mining over the past year. During that period, the price of BTC has plunged more than 80 percent from its all-time high of almost $20,000 in December 2017, leaving some miners on the brink of collapse. Coupled with the price decline, bitcoin extraction is becoming less profitable as a result of the network’s rising hashrate.
For example, Japan’s bitcoin mining hardware manufacturer GMO Internet Inc. wound down operations at the end of December after posting a loss of 24 billion yen ($218 million). The company, which will nonetheless continue to mine in-house, also announced that it is moving its mining center to a region with cleaner and less expensive energy.
In November, U.S.-based bitcoin mining firm Giga Watt filed for bankruptcy at a court in the Eastern District of Washington, revealing that it still owes its biggest 20 unsecured creditors nearly $7 million. Other medium-sized miners in China were recently forced to sell their mining rigs as scrap, to curb further losses.
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