Mining in South American and Central Asian countries

[V-D-S]

I have noticed there is very little discussion on (and in fact relatively few) mines operating in many regions where the discussion should be wide-open.

Paraguay is building the largest mine ever.
https://www.coindesk.com/bitfury-partners-to-launch-bitcoin-mining-centers-in-paraguay

Uzbekistan charges no tax on crypto, and among the lowest energy costs around.

Here is a list of Bitcoin legality by Country:
https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory#Asia

Here are some national average electricity prices:
https://www.globalpetrolprices.com/Uzbekistan/electricity_prices/

Who is working on a project outside USA, Canada, China, the usual places these English posts seem to focus on?
For those with experience, what kinds of challenges have you faced setting up mines outside your country?

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[Loganota]

Here in Brazil there are some people who pay a fixed rate of energy, especially for those who live in more isolated places but because the available power is not so high, it is not possible to create a large mining farm. As the energy tariff here has been very expensive in recent years for those who produce photovoltaic energy prefers to sell to the utility than to mine. The choice of many people is to really mine in Paraguay where the tariff is very low, but there are reports here that there is already a government crackdown on the country's miners.

[fanatic26_]

I cant speak for anyone else but there are some serious challenges when trying to build something like this in a country you are not from. You dont understand laws, customs, or anything of that nature where you are going. You dont speak the language so a proper labor force and contact with contractors can be a pain. Trusting your multi million dollar facility in the hands of locals is a scary proposition, and living down there or spending massive amounts of time down to secure the facility would be pretty terrible considering the distances involved. There are obviously a number of other socioeconomic issues to deal with as well.

For example id shy away from ANY and ALL soviet bloc countries such as Uzbekistan based on the current political climate and the issues we have in the US with Russia right now. I would also stay away from South America as a general rule because of the massive amounts of corruption, struggle, and strife South America seems to constantly have. The US border crisis is in no small part due to the mass exodus of people in South America trying to come up this way through Mexico.

[V-D-S]

Here in Brazil there are some people who pay a fixed rate of energy, especially for those who live in more isolated places but because the available power is not so high, it is not possible to create a large mining farm. As the energy tariff here has been very expensive in recent years for those who produce photovoltaic energy prefers to sell to the utility than to mine. The choice of many people is to really mine in Paraguay where the tariff is very low, but there are reports here that there is already a government crackdown on the country's miners.

A 'crackdown' in paraguay?? Isn't it legal? I assume such since the government is helping coordinate the building of the biggest mining operation ever according to that article above.

I cant speak for anyone else but there are some serious challenges when trying to build something like this in a country you are not from. You dont understand laws, customs, or anything of that nature where you are going. You dont speak the language so a proper labor force and contact with contractors can be a pain. Trusting your multi million dollar facility in the hands of locals is a scary proposition, and living down there or spending massive amounts of time down to secure the facility would be pretty terrible considering the distances involved. There are obviously a number of other socioeconomic issues to deal with as well.

For example id shy away from ANY and ALL soviet bloc countries such as Uzbekistan based on the current political climate and the issues we have in the US with Russia right now. I would also stay away from South America as a general rule because of the massive amounts of corruption, struggle, and strife South America seems to constantly have. The US border crisis is in no small part due to the mass exodus of people in South America trying to come up this way through Mexico.

The average tech blogger isn't going to setup shop down there for sure because electricity is cheap... However... https://en.wikipedia.org/wiki/Chiquita_Brands_International
Chiquita Banana is a Swiss company. I'm confident starting big businesses in developing countries happens.

Granted, they have been forced to fund cartels before, they still manage to pull quite a profit since all that has blown over. The point is entrepreneurs are ready to take risks. Making fortunes is not easy however you cut it. I'm not suggesting some Montreal trader drop everything, move to S.A. and learn spanish... There are very, very, truly rich South Americans and Uzbekistanis (probably some that speak English), or there must be other non-local people with some experience there and some in crypto.

I'm hoping to draw some of the locals out of the woodwork and get their two cents.

[Loganota]

A 'crackdown' in paraguay?? Isn't it legal? I assume such since the government is helping coordinate the building of the biggest mining operation ever according to that article above.

Governments, in general, do not miss the opportunity to cash in on anything that makes a profit. They make up any kind of excuse to guarantee a share of the profit.

[fanatic26_]

The average tech blogger isn't going to setup shop down there for sure because electricity is cheap... However... https://en.wikipedia.org/wiki/Chiquita_Brands_International
Chiquita Banana is a Swiss company. I'm confident starting big businesses in developing countries happens.

Granted, they have been forced to fund cartels before, they still manage to pull quite a profit since all that has blown over. The point is entrepreneurs are ready to take risks. Making fortunes is not easy however you cut it. I'm not suggesting some Montreal trader drop everything, move to S.A. and learn spanish... There are very, very, truly rich South Americans and Uzbekistanis (probably some that speak English), or there must be other non-local people with some experience there and some in crypto.

You were asking about people with experience setting mines up in other countries which I have.

I am not quite sure where you were going with the Chiquita link exactly. Its headquarters are in the UK and the US (also the company was teh successor of another american company, it is not of swiss origin, it just happens their international headquarters are located there). Of course they have south american ties since that is where the fruit that they trade in is grown and sold. This is also a billion dollar company with 20k+ employees. I dont see how you can comepare this to an entrepreneur trying to start a business in an unregulated country in an unregulated industry based in a country they know nothing about.

Obviously there are wealthy people everywhere from doing any number of thousands of different things, that does not mean that anyone starting a business in that general area is going to make it big. Also it is a little concerning how you brush aside the fact that they had to fund terrorist organizations to survive off as just part of doing business. As recently as last year it has been proven they still fund terrorists down there....which is why in my original response to you I mentioned the corruption and other south american issues are a direct red flag for anyone thinking about doing business there.

Also bitcoin itself is illegal in Bolivia, Columbia, Ecuador, and in Venezuela until recently you could be arrested and imprisoned with all of your property seized just because you were mining crypto. I dont know about you, but South America doesnt seem like the most welcoming place for this type of business, as I have previously mentioned.

[Artemis3]

in Venezuela until recently you could be arrested and imprisoned with all of your property seized just because you were mining crypto. I dont know about you, but South America doesnt seem like the most welcoming place for this type of business, as I have previously mentioned.

This is difficult to explain because in most of the world there is such thing as the rule of law. But current Venezuela is different. Think wild west or medieval justice. You "could" do everything by "the rules", and still get all the aforementioned. Or you could smuggle the asics and keep a low profile and still manage to go undetected.

Right now when a regime change is imminent, anything goes. We just don't know what will happen. Things were much better before 2016 when it was "unregulated" and the officials didn't even know anything about it...

Perhaps the new government will regulate crypto favorably, given so many people survived the socialist economy nightmare with it. But i don't expect the electricity to remain this cheap for long. This new government needs to reinstate the rule of law, so potential investors can clearly know what is ok and what is not, instead or rolling the dice everyday...

[philipma1957]

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.

[vit05]

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.

[buwaytress]

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.

[fanatic26_]

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.

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.

[buwaytress]

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.

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.

[fanatic26_]

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.

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.

[NotFuzzyWarm]

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/

[Artemis3]

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/

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.

[philipma1957]

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.

[Artemis3]

Legitimacy with bitcoin is complicated. Even when the State permits mining.
The price of electricity is very expensive in some countries, especially the poor.
Better use of farms and solar energy.

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.

[philipma1957]

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.

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.

[Guinsanity]

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.

[Artemis3]

Yeah, in Argentina with the new president Macri, they started to eliminate the subsidy of energy, water and gas (Now is not that profitable) but i heard alot of people moving to paraguay since they have all that excess energy thank to Yacyreta and Paraguay is a more stable country too to invest in mining.

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.