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Sweden is Evolving into the Next Major Bitcoin Industry and Mining Market

Last Updated March 4, 2021 5:02 PM
Joseph Young
Last Updated March 4, 2021 5:02 PM

Claire Ingram Bogusz, a researcher at Stockholm School of Economics, noted that Sweden’s bitcoin market is growing at a rapid rate, due to friendly regulatory frameworks for fintech startups and cryptocurrency mining.

“Sweden is among the leaders in the global bitcoin market. There’s a very high-level of knowledge about it here, and a high-level of digital competence in the Fintech space. We may not be the size of Hong Kong or London, but it’s hard to find that level of digital competence in other financial centres,” said Bogusz. 

Will Sweden Become the Next Cryptocurrency Mining Hub?

Sweden is already the second largest fintech hub in Europe, with venture capital firms, practical policies, and startup accelerators in place. According to Bogusz, investors in the Swedish fintech market have started to move over to the local bitcoin market, which has seen an exponential increase since the beginning of 2016.

More importantly, an increasing number of bitcoin miners and mining center operators have started to relocate to Sweden, given its cold climate that provides a naturally cool environment for bitcoin miners which tend to overheat, cheap electricity, and low-cost hydroelectric power.

Another region with cheap electricity and cold climate is the mountainous region of Northeastern China. Some of the world’s largest mining centers are already based in that region, due to the cost effectiveness of establishing business in an area in which electricity is cheaply supplied and abundant.

However, Chinese miners have already started to consider relocating to other regions given the uncertainty of the Chinese bitcoin and cryptocurrency markets. Cui, a founder and executive of a major bitcoin mining pool, who asked to remain anonymous in an interview with South China Morning Post due to the current regulatory stance of the Chinese government, stated: 

“Many of us have already paid visit to Vietnam, Laos, Thailand, Russia and the US, negotiating electricity prices with local authorities and buying sites for future use. The business blueprint is bound to go overseas, even if there’s only a 1 per cent possibility that China’s crackdown against bitcoin would extend to mining.”

Cui, who participated in an interview with three other major bitcoin mining pools and their operators declined, further emphasized that the Chinese bitcoin mining industry deals with corrupt grid operators and electricity providers. He noted that bribery is common in the Chinese mining scene, as electricity providers have absolute control over their decision to restrict power supply to certain businesses that fail to comply with their demands.

“No one brags about it because it’s best to make a fortune in silence,” he said.

Liquidity and Cryptocurrency Exchange Ban by China

Liquidity has also become an issue for Chinese miners, as the Chinese government imposed a nationwide ban on cryptocurrency trading in October. It is more challenging for bitcoin miners to sell or distribute bitcoins they have produced.

In regions like Sweden that have electricity that is as cheap as China, colder climate that is necessary to operate mining pools, and friendly regulatory frameworks, bitcoin miners and mining centers can operate more efficiently with freedom, without having to deal with restrictions from local authorities.

Featured image from Shutterstock.