Crypto Miners Are Moving to Japan's Countryside Drawn by Cheap Electricity Subsidies

Francisco Memoria
  • Cryptocurrency mining firms are moving to Japan's rural areas, drawn by cheap electricity and government subsidies.
  • Japan's cryptocurrency mining scene has been evolving.

Cryptocurrency mining firms are now moving to underpopulated, rural areas of Japan drawn by cheap electricity prices and subsidies that help them keep costs down. This makes Japan’s countryside one of the most attractive areas for miners, along with countries like Iceland and Canada.

According to Nikkei Asia Review, cryptocurrency mining firm Alt Design moved to Fukui, a city of around 250,000 people, to take advantage of relatively low electricity and setup costs. The city also has a subsidy program that pays companies who move into unused factory spaces half their rent.

Speaking to the publication, Alt Design’s chief analyst and former banker Shuhei Fujise stated:

Electricity pricing is still somewhat higher here than overseas, but there is demand for an agile company like us, and to actually be able to see the people running the operation.

Shuhei Fujise

Currently, Alt Design employs 10 workers, and has about 500 mining rigs producing bitcoin and ethereum. The firm’s hardware manages to produce about 200 Ethereum per month, worth about $94,500 at press time.

The company’s facilities reportedly consume 2,000 kW per month. Notably, the equipment used belongs to clients, and the Tokyo-based firm merely takes a portion of the generated cryptocurrencies as a commission. Nikkei’s reports states the firm has 10 corporate clients, and constantly turns others away.

The conditions Japan’s countryside offers put it in competition with countries like Iceland, Norway, and Sweden, which are attractive thanks to their low temperatures and an abundance of renewable energy sources, which mean cheap operating costs.

Japan’s Crypto Mining Scene

Notably, there are other companies competing with Alt Design in Japan, in anticipation of future growth. E-commerce firm DMM.com has set up the country’s largest mining operation in the central city of Kanazawa. Internet giant GMO launched a mining operation, but moved to Scandinavia.

DMM reportedly unveiled a showroom displaying 1,000 cryptocurrency mining rigs earlier this year, and has revealed it uses ASIC and GPU miners to produce BTC, ETH, and LTC. Its also set to offer cloud mining services.

As CryptoGlobe covered, internet giant GMO has recently launched a new upgraded 7nm Bitcoin Miner called B3, with hash power of 33 TH/s, that consumes 1,950w. GMO is set to use these machines to “top” mining giant Bitmain, which was recently valued at $12 billion in a funding round, and is set to purchase $50 million in Opera web browser’s IPO.

38% of Crypto Exchanges Interact With High-Risk Entities in 25% or More of Their Transactions

Leading cryptoasset data provider CryptoCompare has published an updated version of its cryptocurrency Exchange Benchmark. The report details that 38% of crypto exchanges interact with high-risk entities in 25% or more of their transactions.

According to CryptoCompare’s Exchange Benchmark, interactions with high-risk entities are considered when the cryptoasset data provider is raking exchanges. These interactions are measured according to CipherTrace’s Interaction Risk Score, which profiles transactional risk by “deanonymizing risky entities and illicit activities to identify criminal sources of funds and money laundering exposure.”

CryptoCompare then scores exchanges according to the percentage of transactions conducted with entities deemed high-risk. These include criminals, darknet markets and vendors, gambling projects, malware operators, cryptocurrency mixers, ransomware operators, and OFAC sanctions addresses.

The benchmark details that addresses with up to 25% of transactions conducted with these entities receive some points, but those above said mark receive none. Notably, 38% of cryptoasset exchanges were above it.

Data shared in the report detailed that Top-Tier cryptoasset exchanges, those graded AA to B in the report, interact less with these entities, while Lower-Tier exchanges, those rated C-E, interacted more. While both AA-related exchanges, Coinbase and Gemini, had no interactions with high-risk entities, some of the exchanges with A, BB, and B ratings did.

As CryptoGlobe reported, the Exchange Benchmark also revealed Top-Tier exchanges are gaining market share against Lower-Tier exchanges. It details that top-tier exchanges accounted for 32% of the global volumes in Q4 2019, while in the first quarter of this year they accounted for 36%.

In the second quarter of 2020, the Top-Tier exchanges already accounted for 40% of the global trading volume. In June these exchanges got to a 46% market share. Lower-Tier Exchanges, have seen their share of the space’s total trading volume drop from 68% to 60% in the last three quarters.

Featured image via Pixabay.