The East Asian country, Mongolia, known for its cheap electricity and being home to the world’s northernmost desert, will see one of its miners almost treble in size this year alone despite the ongoing Bitcoin bear market.
Volatile Crypto Market 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 globally 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.
Yuma Furubayashi, chief executive officer of Ginco Mongol, told Japanese publication Nikkei Asian Review:
“The business environment is increasingly harsh, but we can still produce a profit.”
The market has been harsh for companies involved in cryptocurrency mining over the past year. During that period, the price of BTC has dipped by 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.
Mongolia’s Cold Weather and Cheap Electricity Attract Crowds
Energy consumption costs are a key factor in the profit equation of crypto mining. Electricity prices in Mongolia run at around a third of Japanese rates and lower than in China, which has been home to many crypto miners, the Nikkei Asian Review reported.
With Mongolia's freezing weather and cheap electricity, It is one of the few countries globally where bitcoin miners can still generate a profit, along with the U.S. and Sweden. It is slowly developing into a destination of choice for Japanese miners. The cooler temperatures help to reduce the need for cooling systems for the mining hardware.
Crypto mining is an attractive year-around business for companies in Mongolia, whose core industries like mineral mining, agriculture, and tourism slow down during the harsh winter. The government is actively nurturing the country’s information technology sector, noted the article.
Also last year, the Central Bank of Mongolia approved crypto-friendly legislation, and Mobicom – Mongolia’s largest telecoms network – decided to create its own cryptocurrency, known as “Candy”, whose value is pegged to Mongolia’s fiat currency, the tugrik.