Mongolia’s cold weather and cheap electricity have started to draw more Japanese Bitcoin miners. Despite the declining mining revenues in other regions caused by the present cryptocurrency bear market, firms that have opened a Mongolian shop discovered that running profitable mining operations is still possible.
Tokyo-headquartered e-wallet firm Ginco operates two mining farms in Mongolia’s capital city, Ulaanbaatar. One facility is located at a condominium complex’s underground structure. The business was launched by the company in October, a period when its peers worldwide were considering relaxing operations due to dropping Bitcoin prices that have rendered mining unprofitable.
Ginco is presently operating 600 mining machines and is looking to make it 1,000 units this quarter. On January 11, Ginco Mongol CEO Yuma Furubayashi told Nikkei Asian Review that “the business environment is increasingly harsh, but we can still produce a profit.”
Over the recent year, the market has been unforgiving for businesses involved in crypto mining. During that time, BTC’s price dipped by over 80% from its record high of nearly $20,000 in December 2017. Combined with the price plunge, the network’s rising hashrate has caused Bitcoin extraction to become less profitable.
At the end of December, Japan’s GMO Internet Inc. wound down operations after posting a loss of ¥24 billion. The company will still mine in-house and will transfer its mining center to a region with cheaper and cleaner energy.
The US-headquartered Bitcoin mining firm Giga Watt has filed for bankruptcy in November, saying it still owes almost $7 million to its biggest 20 unsecured creditors. Some medium-sized Chinese miners sold their mining rigs as scrap to curb further losses.
Mongolia, along with Sweden and the US, is among a few nations where Bitcoin mining is still profitable. The country is slowly emerging into a preferred destination for Japanese miners. The freezing weather helps lessen the need for mining hardware cooling systems.
Electricity costs are a significant factor in the profit equation of cryptocurrency mining. In Mongolia, energy rates run at about a third of Japanese prices and lower than in China, which became home to several crypto miners.
Last summer, the Japanese entity iTools has also started mining operations in Mongolia. It claims that mining in Mongolia still returns a profit despite the market condition. iTools’ plans to expand its fleet of mining equipment was put on hold, but CEO Tamir Bayarsaikhan said the business can deepen its blockchain expertise and develop new business. The company rents its gear from Tokyo-headquartered advertising group Unimedia.
Cryptocurrency mining is an attractive year-around business for Mongolian companies whose core industries such as tourism, agriculture, and mineral mining slow down during winter. According to the article, the government nurtures the information technology sector in the nation.
The Mongolian central bank approved crypto-friendly legislation in 2018. The country’s largest telecoms network, Mobicom, created its digital currency “Candy,” whose value is pegged to the tugrik.
Mongolia recently announced a cooperation with Terra, a blockchain payment system backed by Houbi and Binance. Forbes previously reported that the program will launch two features: a P2P payment system to enable transfer among clients of different banks and a mobile payment system.