Sovereign countries mining Bitcoin: advantages and possible outcomes

Should countries consider Bitcoin mining?

Last week, reports highlighted that the Tokyo Electric Power Grid (TEPCO) was aiming to start mining Bitcoin with excess energy. The aim was to capitalize excess energy produced by the publicly-owned utility company.

This event, which puts Japan as the second country to mine Bitcoin after El Salvador, reopens the discussion of what benefits and outcomes Bitcoin mining can have for sovereign states.

Let’s dig a little deeper into the matter.

Why sovereign nations are the perfect Bitcoin miner?

If you’re new to Bitcoin mining, you might be wondering why a country would even consider starting a Bitcoin mining operation. But when you dive into it, it actually makes a lot of sense.

All countries need electricity, and most of them produce their own. However, they often have to generate excess electricity to supply the population. This is because much is lost in inefficiencies and transmission, but also due to the fact that electricity can’t be stored.

As a result, power generation capacity always needs to meet the maximum demand to avoid shortages. But when demand falls, that additional capacity has to be disconnected, sitting idle and generating unnecessary costs to the government.

Bitcoin mining is the perfect solution for generating demand that allows this otherwise wasted capacity not only to remain productive, but to drive several benefits to the country and its people.

All that’s necessary is to set up a mining operation and feed ASIC miners with the stranded electricity. That’s exactly what El Salvador did, and what Japan is planning to do.

Now, let’s further dive into the concrete advantages we’re talking about.

Advantages of Bitcoin mining for sovereign nations

Electricity transverses every single aspect of a functioning society. We use it in transportation, at home, at work, in factories, and so on.

Therefore, Bitcoin mining has the potential to provide several benefits by capitalizing excess energy, including:

• Balancing the energy grid by providing a constant yet flexible demand for power. This enhances energy efficiency and helps avoid blackouts and shortages. For example, in countries with large solar power plants, the electricity production may vary significantly depending on the time of year. Bitcoin mining can provide a way to use this excess energy during times of low demand.
• Taking maximum advantage of public resources by providing a way to use idle resources (such as excess energy or abandoned facilities) to generate value. This can help achieve budgetary balance and improve public income.
• Infrastructural development by simultaneously generating both the demand it requires and the financial resources to carry it out or, at least, cover some of the costs. For example, countries could expand their renewable energy capacity, or supply isolated areas with electricity by constructing facilities that would otherwise be too expensive for small locations.

These sound pretty good, right? But it doesn’t end here. The impact of Bitcoin mining goes far beyond structural changes. It also has many advantages in the social, political, and economic aspects, like:

• Decentralization: Bitcoin is a global, decentralized currency, meaning that it is not controlled by any single entity, including governments. This can provide a degree of financial independence for countries that may be subject to economic sanctions or other forms of external control.
• Increased economic activity: Bitcoin mining can create jobs and stimulate economic activity in countries that favor it. It can also generate income for individuals and businesses in the form of mining rewards.
• Reduced electricity costs for the population: The revenue generated from Bitcoin mining can be used to subsidize the production costs of the same energy used to perform it, allowing citizens to enjoy more accessible electricity.
• Financial inclusion: Bitcoin mining can help to increase financial inclusion in countries where access to traditional financial services is limited. It can allow people to participate in the global economy even if they do not have access to traditional banking services.
• Potential to attract foreign investment: Bitcoin mining can potentially attract foreign investment and technological expertise to countries where it is practiced. This can help to modernize and improve the local economy.

You might be wondering, how can simply plugging a couple thousands of ASIC miners and start mining Bitcoin have so many advantages? The answer lies within Bitcoin’s capacity to capitalize on stranded energy.

As we’ve mentioned, electricity is one of the pillars of modern society, and Bitcoin enables us to bring the infrastructure around it to the next level.

Closing thoughts

Bitcoin mining can provide a number of benefits for sovereign countries.

Besides the additional source of income, it can create employment opportunities for citizens and be a driving factor for economic activity and foreign investments. In addition, it can help promote financial inclusion, as it allows people to participate in the global financial system even if they do not have access to traditional banking services.

Overall, Bitcoin mining can be a valuable addition to a sovereign country’s economy and can help promote economic and infrastructural development, which is why Japan plans to join El Salvador at the vanguard of Bitcoin mining sovereign countries.