Ginco, a Japanese e-wallet organization is running two cryptocurrency mining facilities in the capital city of Mongolia, the Ulaanbaatar. Out of the two mining facilities, one is located underground in a condominium complex. Ginco launched its mining business in October last year when most of its counterparts in the cryptocurrency business were scaling down due to decreasing Bitcoin prices and the slump in the crypto market. The overall bear market rendered the mining business unprofitable, and the decision of the company to foray into the mining segment took many by surprise.
Nonetheless, Ginco remained committed to its decision. In total, Ginco is now operating 600 cryptocurrency mining machines and has a plan to take this number to 1000 machines in this quarter only. Talking to the Japanese Publication, Nikkei Asian Review, the chief executive officer of Ginco, Yuma Furubayshi conceded that although the overall business conditions and the environment in the crypto market are quite harsh, they are still in a position to produce the profit.
Crypto Market Scenario
2018 had inflicted devastating damage to the crypto market, and in the process, all the stakeholders including the cryptocurrency mining companies got severely affected. The year saw the decline of Bitcoin from astronomical heights of almost $20,000 to around $3,200, a loss of more than 80% of the valuation resulting in the collapse of many mining firms among others. On top of that, a decline in the price further took a toll on the mining business virtually making it an unprofitable proposition. Take, for instance, GMO Internet Inc., the Japanese hardware manufacturer for Bitcoin mining, which has announced winding down of the operations post a loss of $218 million (24 billion yen). The company has decided to now continue only with in-house mining operations and will move its installation to the area where cleaner and cheap form of energy is available. In a more severe case of loss, GigaWatt, a US-based mining firm has filed for bankruptcy in Washington owing to its liabilities of around $7 million to the creditors. Along the same lines, some crypto miners in China were compelled to throw mining rigs in scrap prices in order to prevent further losses to the companies.
Advantages in Mongolia
The distinction in case of Mongolia that is attracting the crypto miners is its cold climes and the availability of cheap electricity. Along with the US and Sweden, Mongolia is raising the ladder of popularity and developing as a destination hub of choice for Japanese crypto miners. The cold weather means that the miners need not be worried about installing the costly cooling system for the mining hardware machine which translates into big savings for the company. The cost of electricity is another important influencer of the crypto mining business. In Mongolia, electricity rates are one-third of what is being charged in Japan. Even the cost of electricity in Mongolia is cheaper than that of China which is also home to many crypto mining firms, reported Nikkei Asian Review.
iTools, another cryptocurrency mining firm from Japan started operation in Mongolia in the season of last summer. The company reported that although the crypto market is down, it is still able to run its operations profitably. Currently, iTools has put its expansion plans on hold but the chief executive officer of the company, Tamir Bayarsaikhan said that the company could deepen and expand its expertise in the domain of blockchain technology and to create new businesses opportunities.
Mongolia’s encouraging stance towards crypto
Most of the businesses in Mongolia slow down during the harsh winter although the mining of the cryptocurrency remains unaffected during the whole year. The other business sectors like tourism, agriculture, and mining of the minerals usually take a hit as the season approaches the winter. Keeping the importance of the crypto industry in mind, the central bank of Mongolia last year announced cryptocurrency legislation which is deemed to be positive and friendly for the growth of the crypto industry. Further, the largest telecom network of Mongolia, the Mobicom has announced the creation of its own Candy cryptocurrency which is tied to the fiat currency of Mongolia, the tugrik.
Moreover, Mongolia will partner with a blockchain payment system named Terra for carrying out financial transactions using blockchain technology. So that you know, Terra is a payment system which has the backing of Houbi and Binance exchanges. The new payment exchange system will provide two facilities to the users: Mobile payment facility and peer-to-peer payment facility.