China's Bitcoin miners may be eyeing Sweden and the Nordic countries as a new home, but they may be crucially ignoring another place much closer to home.
In a report released last month, Bitcoin mining and media firm HASHR8 identified Kazakhstan as a low-key newcomer in Bitcoin's "hash war."
Drawing on various studies and existing data, the report notes that Kazakhstan's share of the Bitcoin hash rate pie expanded from 1.4% to nearly 6.2% between September 2019 and April 2020.
Among the reasons, according to the report, are the country's highly competitive electricity rates. Kazakh miners enjoy premiums which place them in the luckiest 5 percent of all Bitcoin mining participants.
"Previous research has estimated that only 27.5% of the Bitcoin network has secured electricity rates of $0.04 per kWh or lower," part of HASHR8's concluding statements reads.
Miners that invest in energy infrastructure can secure rates as low as $0.02 per kWh. Research suggests such rates are among the lowest 5%.
Miners' fortunes saw a welcome boost last year after the government, previously averse to cryptocurrency, opted to legalize Bitcoin mining in June. The move was timely, coming just weeks after Bitcoin's most recent block subsidy halving, an event which instantly cut miner revenues per block by 50 percent.
"Legal clarity is extremely positive for the advancement of the Bitcoin mining industry in Kazakhstan," HASHR8 continues.
As the BTC Times reported, the legalization was soon followed by investment commitments, with the government pledging funds equal to $715 million to expand the mining sector.
Nonetheless, conspicuous hurdles remain. While mining is now an official economic activity, exchanging what Kazakhstan calls "unsecured" digital assets such as bitcoin remains illegal. As HASHR8 explains, this means companies are still forced to send bitcoin overseas in order to convert it to fiat, then use the legacy banking system to bring the funds home.
This, however, may itself soon be a thing of the past.
"Advancement in the broader cryptocurrency industry in Kazakhstan is also expected with a domestic exchange for converting between fiat and cryptocurrency potentially launching in 2021," the report adds.
Next year could thus continue Kazakhstan's rise to prominence within the evolving race to secure Bitcoin hashrate dominance. Upheaval in China, where miners continue to battle uncertain regulatory climate, is seeing a reported rebalancing of hash rate prowess as miners relocate to Europe. Scandinavia, thanks to uniquely wet conditions last year, now has a surplus of cheap hydroelectric power ideal for Bitcoin-related activites.