Members of the Indian crypto community have received offers to set up mining facilities after reports of potentially negative developments for miners in China. According to local media, businesses are already exploring such opportunities as India has some of the lowest electricity rates. Upcoming regulation, however, may put some hurdles on the track.
Also read: Chinese Authorities Ask Local Miners to Submit Monthly Status Reports
Companies Expect Clear Guidelines
“As China stamps out bitcoin miners, India sees opportunity”, a Mumbai-based publication speculated, quoting sources from the sector. More than three quarters of the mining hardware have been installed in China, producing 80 percent of the world’s bitcoin supply, while Indian operations account for just 2 percent, according to the DNA daily, published in the financial capital.
“Countries across the globe are inviting miners to initiate mining activities. They are offering free electricity, rebates on set-up and tax advantages, along with citizenship”, Manu Prashant Wig, a digital marketing consultant, told the newspaper. A company he is working with is planning to open a mining center in the Indian state of Chhattisgarh.
The majority of Indian crypto players are careful not to deviate from government guidelines, the article notes. Entrepreneurs are hoping for incentives to open new bitcoin mining centers and expect a “clear policy” to steer their business.
A computer engineer told the daily about several offers received by his mining company over the past few days. He referred to them as “new business opportunities” and said:
We are now waiting for the government’s guidelines for the crypto business.
To Mine, or Not to Mine in China?
Conflicting reports about recent developments in Beijing have worried Chinese mining businesses. The bottom line seems to be that authorities are moving to limit preferential policies regarding power/land usage and taxation that miners might enjoy locally.
Many of the largest mining companies are currently based in the People’s Republic, taking advantage of cheap electricity and affordable hardware. Local and international media have announced that some of them are actively looking into opportunities to relocate abroad. They have found favorable conditions and incentives in countries like Iceland, Russia, Iran, and in North America.
Major players are exploring options and have set plans in motion, according to some reports. The biggest mining operator Bitmain is setting up regional headquarters in Singapore. It has also established mining facilities in the U.S. and a new branch in Switzerland. The third-biggest mining pool, BTC.Top, is opening a farm in Canada. The next miner on the list, ViaBTC, is already operating in North America and Iceland.
Will India Mine – That is the Question
India is in a good position to use Beijing’s reluctance to support the booming Chinese mining sector. The centralized decisions of the most populous People’s Republic may present the most populous democracy with some unexpected opportunities. Besides, according to Statista, electricity rates in India have averaged $0.08 per kWh in 2017, and in China $0.09.
The government in Delhi is on the verge of making important decisions on how to treat bitcoin. A specially appointed panel has submitted its report to the Finance Minister Arun Jaitley in August. There are indications that Indian authorities may “go the China way” and “throttle the cryptocurrency market” with regulatory hurdles.
The government has issued multiple warnings about the risks of crypto investing. Regulations should be tailored to protect investors and curb money laundering. But according to Satish Mugulavalli, tech director at the venture capital firm YourNest, the central bank is still “trying to understand how these things will pan out”.
Ultimately, over the next six months we will see much clearer regulations.
It has been reported that the Reserve Bank of India has issued a circular to private banks to halt virtual account services for operators of cryptocurrency exchanges. This is according to the CEO of BuyUCoin Shivam Thakral, which has forced many commercial banks to withdraw facility of such accounts, slowing down trading. Another popular Indian exchange, Koinex, explained delays in Rupee withdrawals as being due to a “tussle” between its payment service partner and their bank.
Certain expenses in India are comparable to those in China and some crypto businesses may relocate there, if Delhi makes the right choices. Such developments could potentially improve Sino-Indian trade relations. Electricity is cheap in India, but miners will also need access to cheap hardware to make the move work.
Do you think India has potential to attract bitcoin mining businesses? Tell us in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.