Benefiting from the wettest weather in more than 20 years, hydroelectric power plants in the Nordic region have increased their power generation this year, making electricity prices in Sweden and Norway the lowest in the world. Due to the collapse of electricity prices, the profits of Bitcoin mining activities in the Nordic region have tripled this year.
In 2020, the price of Bitcoin has nearly tripled. At the same time, due to the unique weather, electricity, the most important raw material for making Bitcoin in the Nordic region this year, continues to exceed demand.
Bitcoin is generally mined by a supercomputer farm in a lobby the size of an airport hangar, relying on complex algorithms. This makes electricity one of the key costs. The electricity consumed by these supercomputers is sometimes equivalent to the electricity consumption of 70,000 households.
The current changes in the electricity market have provided large bitcoin miners with alternative locations for bitcoin mining. In the past, bitcoin mining activities were mainly concentrated in China, Kazakhstan and Canada.
In recent years, the increase in electricity costs and the decline in the price of most virtual currencies have made the profitability of mining activities weak. During the Bitcoin rally in 2017, many miners attracted to regions such as China, Kazakhstan and Canada have chosen to leave.
“The companies that survived the difficult times, like us, are now happy,” said Philip Salter, head of operations at Hong Kong-based Genesis Mining Co., Ltd., which operates a data center in Boden, Sweden. “Sometimes we are not profitable at all, but our profitability has more than tripled in the past year.”
Norwegian electricity prices plummet
The abnormally humid weather has brought the reservoirs in the Nordic region to the highest level in more than 20 years, and the amount of electricity generation has surged-the price of electricity has also been close to zero for a long time. The average electricity price in the region this year is only about one third of that of Germany, the largest electricity market in Europe.
Among the 30 member states of the International Energy Agency, Norway has the lowest industrial electricity price this year. In the first half of this year, its price for non-home users is also the lowest in the EU, which is lower than the electricity price in Iceland, another hot spot for cryptocurrency mining.
“If you don’t consider fees and taxes, the prices here are the lowest you can find in the world.” said Tor Reier Lilleholt, head of analysis at Norwegian consulting company Wattsight AS.
Environmentally friendly, low political risk
In addition, the main environmental benefit of locating mining bases in the Nordic region is that the electricity here is almost carbon-free, mainly composed of hydro, nuclear and wind power. For many institutional investors attracted by cryptocurrencies, this is becoming increasingly important. Institutional buying is one of the main factors behind the recent price surge.
Moreover, the outflow of Bitcoin from the Nordic region helps reduce its political risks.
“As Bitcoin investors become more public and want more stability and critical security, China’s mining business is shifting to Sweden and other Western countries. This is a very important strategic change.” Te said, “This is one of the biggest developments in Bitcoin mining that deserves attention.”
Bitcoin computing power, China is still the world’s highest
The Bitcoin mining map released by the Cambridge University Center for Emerging Finance Research (CCAF) in May this year shows the current global hash rate of Bitcoin mining (a measurement unit that measures the processing power of the Bitcoin network, also known as computing power). ) Distribution status. The map shows that most of the current hash rates are located in China.
Taking the latest April 2020 data as an example, China accounts for 65.08%, almost 9 times that of the United States. The United States ranked second with 7.24%, followed by Russia with 6.90%, Kazakhstan with 6.17%, Malaysia with 4.33% and Iran with 3.82%.
In China, the main hash rates are distributed in Sichuan, Xinjiang, Inner Mongolia, Yunnan, Gansu, and Beijing.
It is worth noting that this winter, power shortages in some parts of China may make the power supply even more tight, and may have a certain impact on Bitcoin mining.
