Mongol hoard? Mongolia emerges as cryptocurrency mining hub

Mongolia has become one of the few nations where cryptocurrency mining is profitable thanks to its freezing temperatures and cheap power.

Since the Bitcoin crash, many miners, particularly in China, have abandoned operations as the cost of equipment and electricity have rendered it commercially unviable.

But Mongolia has seen a rise in mining activity thanks to its equipment-friendly climate – capital Ulaanbaatar shares the rank of the world’s coldest capital city with Moscow in Russia, Ottawa in Canada, and Kazakhstan’s Astana.

Energy costs are also among the lowest in the world, and mining – the process of generating new units of cryptocurrency by solving complex puzzles – requires vast amounts of electricity.

Tokyo-based e-wallet company Ginco runs about 600 mining computers in Ulaanbaatar and plans to add another 1,000 units this year.

Yuma Furubayashi, CEO of Ginco Mongol, told Nikkei Asian Review: “The business environment is increasingly harsh, but we can still produce a profit.”

The trend is helped by the government, which is keen to nurture an industry that can operate when the biting weather slows mineral mining, agriculture, and tourism.

The Bitcoin crash hit China hard, with reports of miners selling equipment by the kilo after going broke.

Earlier this month, Coin Rivet spoke to a leading blockchain consultant who said mining will continue to be profitable at scale.

Christian Richards, director of business development for blockchain and mining operations for the Canadian Fibre Centre, says the peak in the price of cryptocurrency in December 2017 led to “regular and retail ghetto crypto miners in their basements and garden sheds mining.”

But the “biggest drop in cryptocurrency price means for so many it is now uneconomical.”

Richards is in touch with “large-scale miners” and says it remains profitable at scale and will continue to be profitable going into 2019.

“Everything is pointing to mining at scale,” he says. “Essentially the smaller Bitcoin miners are exiting, but it is not going into a death spiral. Larger mining operations are wanting to expand.”