Why mining bitcoin and cryptocurrency is a challenge in India Quartz India

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China’s crackdown on cryptocurrency mining could have been an opportunity for e-money enthusiasts in India. But a lack of basic infrastructure and policies could prevent them from being overly optimistic.

Since May, China has cracked down on cryptocurrency mining in an effort to reduce carbon emissions, prevent money laundering, and maintain financial stability. The country has banned banks and payment companies from providing services for digital coin transactions, arrested several people engaging in cryptocurrency transactions, and suspended crypto-related accounts on Weibo.

This crackdown has led to an exodus of bitcoin miners from China, which accounts for around 70% of global capacity, and many are looking to turn to friendly alternatives like the United States and Kazakhstan.

Meanwhile, in India, the cryptocurrency ecosystem is booming. But when it comes to mining, India is lagging behind. As a crypto-market, India has not grown as other countries have been able to due to regulatory uncertainty. It’s still in its infancy, said Nischal Shetty, co-founder of Indian cryptocurrency exchange WazirX.

Cryptocurrency mining in India

There has been a slight increase in cryptocurrency mining in India in recent years. Companies such as Easyfi Network provide mining facilities and blockchain development in the country. WazirX’s Shetty believes there may be other pockets of small-scale mining in parts of the country. However, no official information is available on this subject.

Members of the ecosystem believe that supporting cryptocurrency mining could bring many benefits to the country. When you authorize these (mining) operations there are two things that can result from it, one is investment and the other is employment. And there is an economic activity that is generated around that. So India could take advantage of it if it wanted to, Shetty said.

But like most things cryptocurrency related in India, mining in the country can be risky.

India does not have clear rules for cryptocurrencies, which makes any investment in the space risky. The Indian government and the central bank have so far maintained a love-hate relationship with cryptocurrencies. While in the past they have openly criticized the asset class and even temporarily prevented banks from facilitating such transactions, they have also hinted that they will be launching their own digital coin. In 2017, India banned the import of ASCI machines specifically designed for crypto mining, forcing Bengaluru-based blockchain technology company AB Nexus to stop mining for bitcoin and ethereum. .

Those who invest in the segment constantly fear a sudden government crackdown. The Indian government has a habit of banning what it doesn’t understand Gasing the building to kill a fly, New York-based Indian investor Pankaj Jain told news site CoinDesk in 2020.

Besides regulatory hurdles, experts say India lacks basic infrastructure.

Cryptocurrency mining and electricity

Since bitcoin mining is an energy intensive process, setting up blockchain pools in India can be tedious and expensive. In India, the annual cost of electricity varies between Rs 5.20 and 8.20 (7-11 cents) per kilowatt hour on average, compared to Kazakhstan, where it costs 4-5 cents / kWh.

Cryptocurrency mining consumes around 67.29 terawatt hours per year, according to an estimate from the Cambridge Bitcoin Electricity Consumption Index. On May 10, global electricity consumption for bitcoin mining peaked at 141.28 terawatt hours for the very first time.

Mining may not be profitable in India due to the cost of electricity, said WazirX’s Shetty. If you get into renewable energy sources like solar panels, it can pay off.

Shetty believes that inducing miners in the form of grants may be a way to develop a cryptocurrency ecosystem in India.

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