Bitcoin mining is a process of using a computer to solve a cryptographic puzzle. To solve the puzzle, the miner must use a Bitcoin address to receive a block reward and new Bitcoins. Although modern Bitcoins are not created by mining, mining is the main way to obtain them. At the time of writing, there are about 11.5 million Bitcoins in circulation, with a total market value of about $1.6 billion.
For those who may not be aware, crypto-currencies like Bitcoin mining is a process of creating new coins that can later be exchanged for real currencies like the US dollar, Euro, or other currency. The process relies on increasingly complex computer algorithms to solve a cryptographic puzzle so the network can verify the transaction. The Bitcoin network is run by a decentralized group of miners who provide proof of work, a record of the cryptographic puzzle, in exchange for a portion of each new coin.
Despite the recent excitement over the exponential growth of cryptocurrency mining in Brazil, it’s a largely untapped market that shows potential to become one of the biggest sources of renewable energy in the country. Record high unemployment and a sudden increase in Bitcoin mining, however, have created a substantial demand for this green power, which many are surprised to discover comes from domestic sources.Faced with rising unemployment and rampant economic uncertainty due to the Covida crisis, more and more Brazilians are finding an alternative source of income in mining cryptocurrencies. We’ve even seen GPU installations in favelas, where a relatively small investment can yield more than the average Brazilian salary.
Pandemic and uncertainty drive more Brazilians to mine cryptocurrencies
The ongoing coronavirus pandemic has hit Brazil the hardest, with more than 450,000 deaths due to Covid-19. South America’s largest economy shrank by more than 4 percent in 2020, leading to a nearly decade high unemployment rate of 14.3 million unemployed citizens, the National Statistics Office announced earlier this year. Low or no wages and bleak economic prospects force Brazilians to find new ways to make ends meet. According to a recent report by Portal do Bitcoin, more and more people in the country are turning to mining crypto currency as an alternative source of income. Government data showing a strong increase in imports of appliances and in electricity consumption confirm this trend. Profitability depends on scale, but the 34-year-old Piumi student’s publication on cryptocurrencies has helped him better understand the economics of home mines. Expedito Felipe began mining Ether (ETH) in January to increase and diversify his income by investing 47,000 reais (about $9,000) in equipment. He earns between R$3,000 and R$5,000 a month (about $600 to $900) and only spends about $100 on electricity. In the absence of precise figures, it is difficult to accurately assess the true extent of domestic mining activity in Brazil, but circumstantial evidence suggests that it is thriving. There are several large Facebook groups that provide information on the technical aspects, and YouTube videos on the subject have reached hundreds of thousands of views. According to some social media reports, the platforms are now even active in the favelas, Brazil’s poorest neighborhoods.
Brazil imports $20 million worth of graphics cards in the first quarter of this year
Socio-economic problems such as unemployment, lack of opportunities and the devaluation of the Brazilian real can partially explain the crypto boom, but according to José Guilherme Silva Vieira, professor of economics at the Federal University of Parana, it is the positive difference between expected income and costs that really interests people. Speaking to Portal do Bitcoin, he explained: The cost is determined by the equipment used and the cost. The mining industry consumes a lot of electricity. However, revenues have exploded over the past 12 months due to the overvaluation of cryptocurrencies. Graphics cards are an important hardware component of home computers, and Brazil has seen an increase in their imports this year. According to data from the Ministry of Industry, Foreign Trade and Services, Brazilian companies imported GPUs worth $106 million (more than $20 million) in the first quarter alone, four times as much as in the same period in 2020. Electricity consumption has also increased significantly in some regions. There is no official statement from the government linking the increase in energy consumption to cryptocurrency mining. However, one of Brazil’s largest electricity suppliers, Enel Distribuição São Paulo, recorded 69 000 cases of grid theft in the 24 municipalities served by the utility in 2020 alone. This is almost 20% more than the previous year. Is home mining of crypto currency profitable in your country? Share your thoughts on this topic in the comments section below.
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Brazil, Brazilian, crypto, crypto mining, cryptocurrencies, cryptocurrency, ETH, Ethereum, favelas, GPUs, graphics cards, import, miner, mining, miners, unsafe, unemployment, unemployment, graphics cards, economy. Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.A recent article on the price of cryptocurrency mining hardware in Brazil has highlighted the future risk of a crypto shortage due to the growing popularity of mining hardware in the South American nation. The article, titled “Cryptocurrency Mining Spikes in Brazil Amid Record High Unemployment – Mining Bitcoin News”, details that, “the price of a mining rig has increased by nearly 50% in the past 30 days, as mining difficulty has increased by nearly 200%, and the number of new miners has increased by over a thousand in the last few months.”. Read more about brazil unemployment rate covid and let us know what you think.
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