Topic: Mining in South American and Central Asian countries (Read 1813 times)

Adding to the previous comments about Armenia and Georgia, I've just returned from a short visit to Kazakhstan and wasn't surprised at all to learn that there also, at least according to my contacts, people were definitely starting up crypto mining -- wasn't clear if it was for Bitcoin.

Now unlike the two I talked about, there is not yet a big network of hydropower, but plenty of land and existing infrastructure especially in the east, and ongoing work to see out a whole new shebang of hydro generators.

Even in the most expensive rate in the capital -- without discounts and subsidies for new economies (government trying to diversify from oil and gas, a LOT of incentives now for enterprise) -- 1 kWh = $0.03.

No with Bitmain, you can just send the things back to USA, either warranty or repairs. This is a problem with some other manufacturers, as sending to China isn't cheap.

I have experience with this and completely agree with several of the aforementioned points. Specifically:

-Cryptocurrency is a relatively new thing in this part of the world, which can really be a pain in an already highly bureaucratic business environment. Moreover, depending on the country, you can receive unsolicited requests from the usual suspects if they find out you produce "X" amount at a facility. The funny thing is that for some reason people tend to assume that facilities are way more profitable than they really are. This can lead to unreasonable requests that can literally kill the business.

-Infrastructure can be a hassle. Where I operate, the power company expects you to cover everything. This includes heavier gauge cables all the way to the nearest substation if necessary. 5,000 feet of transmission cable won't bankrupt the operation but 50,000 just might. I've seen fellow miners install everything just to find out that they can't pull that draw. This poses a business risk that's hard to determine until you power up in stages and measure things. In addition, you may be faced (as I have) with rare input voltages from your primary lines. This can seriously increase your infrastructure costs as you're forced to source items that are typically sold outside the country. That means import taxes, the risk of having your equipment held for weeks at a time in customs and, finally, getting faulty equipment as you can't test it prior to clearing all the previous hurdles. There are some reputable third-party firms that provide test results but more than a few times these are faked.

-You have to seriously invest in your power delivery infrastructure as power tends to be finicky not to mention that you have to budget for downtime whenever it goes out. I mean, there isn't a generator in the world that would be profitable at powering miners on a large scale so when the lights go out... just pray they come back ASAP.

-Security.... I can't stress this one enough. Anything that remotely resembles a warehouse or data center is a magnet for criminals. Moreover, you have to be careful as to how you assemble your build crew given that they'll either know what you're doing or eventually come across a crypto article with a picture of, you guessed it, very very similar equipment and setups. Add to that all the sensational headlines of BTC going to $200k and you can imagine how someone might develop a nefarious idea.

-Cooling. Working in a hot climate year round poses a host of unique problems. We've been successful by carefully selecting large building with good cross ventilation and adequate intakes/outtakes. If you keep feeding the equipment fresh air it will tend to operate fine. I envy guys up north that can simply open the windows and have the miners running much faster/cooler but, hey, what can I do about it.

-Last but not least, dealing with the local "IRS". Where I'm at, these guys usually don't know how to deal with crypto (because they simply never contemplated it in their fiscal framework), which results in a lot of trips to their offices. I would highly recommend a good tax counsel if operating in these countries as it can seriously make a huge impact with regards to net profits. Expect audits eventually, retain good counsel, and keep all records and you should he fine. However, at least where I'm building out, there is always the chance that a regulator or politician will suddenly flip on you and derail everything. In other words, do everything by the book and retain good counsel as, unlike in other situations, they'll prove their worth.

That's all I can think off the top of my head. I guess issues with bringing the units in are kinda on the list but yeah, it can be a bigger pain if the country has yet to determine the applicable import rate.

PS. Almost forgot, you can kiss your equipments' warranty goodbye. Even if you run into a faulty unit, unless the manufacturer covers all of the shipping expenses, it'll likely be cheaper to just take whatever hashboards/control units are still OK and just use them for future repairs.

Socialist Venezuela has 3 month probation. Its technically impossible to fire people after that though.
Some companies go "bankrupt" every year, and a new one with the same owners open in place the next year.
Pesky employees can be made to resign with a "happy meal" bonus, which usually involves the same bonus as it if he/she was fired (back when getting fired without justification was still an option), ie: "double" pay.

But the wages are like 5 USD a month... One year you say? 60 USD :3

You are correct that connections is everything. We have hyper-inflation and hyper-corruption, know they right person connected to the "gov", and you are golden.

A good mine has very small plaintiff anyway, and remote surveillance lots of remote control, automation etc.

But i admit there are far bigger problems for concern, its not worth the risk coming to a country with "free"* electricity when it goes down every other day or so, and internet communications are worse.

* Yeah i know its not really free, but its price is so ridiculous i won't bother calculating it, just like the gasoline.

I believe it was Honduras the one originally labeled banana republic.

Chiquita built on the infrastructure developed by United Fruit Company, famous for turning latin american countries into massive "Company Towns", which is why central American and Caribbean countries are refered to as "Banana Republics"

As someone who professionally manages international businesses with locations the 3rd world locations such as rural China, Philippines,Russia, Ukraine , Costa Rica Panama and Brazil , I can tell you that the environment for businesses in most of Latin America is in fact considered toxic, even by Chinese or Russian based international firms...

The lengths you must go to to insure success here insure that only locals , with direct connections and a superlative knowledge of the local workforce, ever have a chance of even getting started.. And even then the success rate is in the low single digit percentage rate.

Imagine managing  a workforce that has a legal right to receive up to 1 years salary if they are fired for any reason after working their first day. no probationary period.. no exceptions to the rule.. unless your willing to bribe a local official to look the other way.


Edit: This is not to say that you cant run a bitcoin mine down here.. Its just a lot more difficult than other places, such as East Asia.

Yeah I have been working on getting something setup in country very far away since we know people in the government to help us secure what we are looking for. The downside is we don't live out there.

Ex-Eastern bloc countries which joined the EU are safe to do business in. You should still hire law firm if you don't know the local language though. Russia and those countries which are Russia-aligned aren't the safest places to outsiders (and to locals often, too) when it comes to doing business. Ukraine is no longer Russia-aligned but the business climate is still a little rough around the edges.

Can't you instead sell electricity to the grid? The higher price electricity is, the more interesting it becomes for renewable generation that you could sell them, and it could be combined with mining. In the future, even 3¢ will be to high, so you might as well be planning ahead, instead of making "large" mines, make them small but combined with renewable energy, those will last longer, you will see. Make it too big grid only, and it will have to close.

Venezuela is about corruption. Have the right ties and they'll let you install in a place. The de-facto gov was last year seeking foreign investors for crypto mining, but of course the risks are too high. Sure the electricity is free, but unreliable. And you can also be targeted by crime for "looking wealthy" (and by local definition most foreigners automatically are). Also you'll probably want to protect the place with armed guards...

If a new gov comes things might get better, but i don't expect this new gov would keep the electricity (and gasoline) eternally free. Venezuela has the 3rd largest hydro-power generation in the continent, so the potential is there especially close to the dams. We used to export electricity to Colombia and Brazil a couple of decades ago... Don't judge the country for the current tragedy brought by socialism.

Im brazillian, and the energy cost and availability in a industral environment its low, unless you produce your own. The costs of solar arrays its so far expensive too, the import fees its 60%.

Actually I have a small farm on Paraguay, the energy cost could go as low as $0,039 but you have some limitations like 3mw per site, if you want some bigger farms you have to make a substation, then you gonna need some very political influence$$$. The import fees its very low.

Argentina as i heard have low cost when Cristina Kirchner was president, today the energy dont have more the subsidy, dont know the cost right now.

Venezuela... forget about it.

yep  using the mining of btc to create a solar array is the way to go.

a well made solar array  lasts 20-30 years  even 35 if lucky.

Eventually mining anywhere will be too expensive to continue using only the grid, so you should be investing now in renewable energy if you plan to keep mining in the future. And yes worldwide mining will shrink, the last miners will be those who wisely invested in solar/wind etc instead of spending it all in Asics expanding beyond control only to go bankrupt not much later.

I hope things improve.  The history of the entire world has always had a handful of power mad A-Holes that make life far worse then it needs to be.

Playing games with people just because they can.

If the government changes we will return to have very good electricity, its only like that now because of the irresponsible socialist government has let all state owned companies deteriorate to this point.

But from a resources point of view, that single dam is already providing 80% of the power nationwide, it is able to provide past 100% but as i said, it has suffered decades of abuse and improper maintenance.

But wait there is more:

The same river can accommodate at least two more similar dams. The projects exist, only the current inept politicians (who formerly contracted Odebrecht to build them) stand in the way...

And, the country has so much natural gas it could also provide all its power from it. The last century, most of the extracted natural gas was just burnt away, simply because it was "less profitable" than the oil it was with. A shame. There is still plenty and its mostly still burned without use (it cannot be left alone in the environment due to the industrial risk, its either use or lose).

And then there is oil (Petroleum), very heavy oil, which is expensive to make it into lighter fuels like gasoline, but good for power plants. Not as clean tho, its a slight step up from coal.

Did i mention being in the tropics, the amount of sun it gets is quite intense? Yes solar panels paradise... And there is a region with so much strong winds even a State owned initiative to generate plenty of wind power was built a decade or so ago, but was let run down by the current usurper.

Don't judge the country because of a few corrupt individuals... Things will change for the better.

When dealing with smaller countries also keep in mind what can happen when the government is corrupt/insane leading to infrastructure problems like Venezuela is having right now... https://www.wired.com/story/venezuela-power-outage-black-start/

I am lucky to have the experience both with a failed and a successful crypto mining company which I think uniquely qualifies me when speaking on such matters. From a business perspective the build cost, operational costs, and profitability of what is running are all different things and I would personally not lump them together like that. I could write an essay detailing the mistakes made by a company like gigawatt and break it down close to the individual decision points that ruined them but I dont think it is really necessary.

The single biggest mistake you can make in this industry is forecasting and using profitability models. In order to be successful in this space, you need to be operationally lean, you need to learn to ignore the price of bitcoin (as counter intuitive as it seems), and you need to plan everything you do like you have no money and are barely going to make it.

But you've been on both sides, so of course you have this perspective =)

I'm saying hobbyists actually have a better idea of profitability, not that they're profitable. They definitely don't always prioritise profit, they've never really been motivated and getting into profitability is a bonus for them.

I'm saying it's the larger scale guys with no prior personal experience who tend to overestimate profitability. You saw GW overestimated build costs and delays... that's all part of profitability. You estimated that better probably because you started on the other side.

Best wishes and luck to you. I do agree there are overlooked options with increasingly safer and stabler political and socioeconomic climates. I mentoned the region where Georgia and Armenia are, it's a sweet spot right in between Europe and Central Asia, and I know people are already scouting to expand.

As someone that has been on both sides of what you are talking about I am going to have to disagree. I have found many hobby miners are willing to run things for no profit or at a loss so that they can feel like they are part of the crypto movement and feel like they have helped. As far as the larger scale goes, you cannot pigeonhole everyone into one idea. The reason gigawatt failed is not incorrect profitability forecasts, its the fact that they went so far over on build costs and had so many delays they never had the income from hosting customers to begin with. Many large scale miners have decided to keep things in house and not host. This is why my 20 megawatt facility is still up and running while many many others have fallen by the wayside. When bitcoins price fell, hosting contracts went upside down and people shut things off because they could no longer cover their hosting fees. A company with everything in house that is not paying $90/kwh for hosting, but paying more along the lines of $35/kwh for its own electricity stands a much better chance of surviving as we did.

My personal feeling is the reality is there are plenty of locations in countries with safer political and socioeconomic climates to start a business like thi if you are looking internationally. Locals would stand a much better chance of survival and that just adds risk that doesnt need to be there for someone that is not native to the area.

There's quite a huge discrepancy in thinking from entrepreneurs who've actually had experience mining, and then industrialists who have experience doing things on large scale. The former understands that hobbyists have a better comprehension of how profitable it can be, and the latter often overestimates how long profitability can be sustained, as can be seen by the spectacular failures of those like GigaWatts.

But to put this back on topic, there's a movement stirring and brewing in the Caucasus region. Now I know this is not strictly Central Asian at all but actually close enough geographically, and economically almost set up similarly. Armenia is one such example, a lot of visible Soviet influence, and when I visited, people knew about Bitcoin, and even on this forum there have been business people from there really keen on setting things up. There also seems huge support from the local government to bring in alternative revenue. Georgia as well getting a lot of mining interest, despite the plunge in price. Cheap and plentiful hydro power in both is the main driver.

You should also consider the costs to import the equipment. You will have to pay many fees, and they are not usually cheap. And the energy in South America is not very cheap in every country. Only in some of them because of some particularities. Paraguay has half of one of the largest hydroelectric plants in the world and does not use all the energy to which it is entitled in its quota, so it has cheaper energy. But it is not much cheaper than in other countries. So if you calculate everything, it is not as profitable to make people want to move their operation to there.

As Loganota said, many Brazilian entrepreneurs moved there to mine Bitcoin. But few really do. Most have just created Ponzi schemes and use a supposed mining company as marketing.

doing business is a foreign country is hard.

Especially if you don't have relatives an or trusted friends to look it over for you.

Here in the states mining coins can be close to a certain profit.
You need to know the rules of the state you live in and plan accordingly.
I am expanding in NJ, USA I should make a profit.
That is hard to say in many places.
I can say it here in NJ.
Will I get rich no as I don't have the $$$ to really grow.
But buysolar and I did
a 100kwatt solar array
a 300kwatt solar array
and are in talks for a 500-1000kwatt solar array

I would estimate a 10megawatt setup would also work but finding the right people make that a bit harder to do.

Based on this why go to a foreign country?  Well in my case i won't.

I have some family in Australia, Argentina, Canada, Italy, Norway.
But I just don't need to do it.