Bitcoin mining involves solving complex mathematical problems with a particular set of computers and the purpose of this process is to create new bitcoins. For his contribution to the network, the bitcoin miner receives a newly generated bitcoin, as well as a transaction fee. Perhaps the most popular way to get bitcoins is through bitcoin mining, the process of crypto mining that also allows you to store value.
But not every country welcomes Bitcoin mining; it is both legal, economic and environmental issue. Among these countries is Nepal, where Bitcoin mining is illegal and can be certainly punished by law. I will explain in this blog post why Bitcoin mining in Nepal is banned, what are the negative implications of this activity and what the alternatives are for Nepali Bitcoin enthusiasts.
Why is Nepal banning Bitcoin mining?
In 2017, the central bank Nepal Rastra Bank (NRB) issued a notice baning Bitcoin and other cryptocurrencies in the country. The NRB gave the following reasons for its decision:
• Laws of Nepal: Bitcoin is never a currency in the NRB act of 2058 BS or foreign exchange act of 2019 BS and transacting online with Bitcoin is a crime.
• Lack of regulations from the Nepal government and NRB: Being the decentralized and anonymous form that Bitcoin is, it is impossible for Nepal to monitor and control the transactions using its authority and Nepal does not have the technology available to it.
• Use of Bitcoin in illegal activities: Bitcoin is potentially to be used to launder money, evade taxes, or fund criminal activity, in a method that is not traceable or accountable.
• Threat of causing damage to the Nepali economy: More Nepalis using Bitcoin may lower the country’s tax revenue and foreign exchange reserves. Bitcoin prices are unpredictable and very volatile, it could also be creating instability and volatility in the economy.
Bitcoin trading and their use are included in the ban on Bitcoin and cryptocurrency by the NRB as well as mining. For that reason, it’s against the law for anyone who is in Bitcoin mining in Nepal and you can be prosecuted for that.
What are the consequences of engaging in Bitcoin mining in Nepal?
Bitcoin mining in Nepal can be costly and of severe consequences. The NRB's notice says anyone found to be mining in Bitcoin or other cryptocurrencies they will be dealt with in accordance with existing laws. And these penalties could entail fines, or prison, or confiscation of assets, or deportation if you're a foreigner.
Beside legal risks, Bitcoin mining has financial and technical risks. It requires a ridiculous amount of computing power to do bitcoin mining, which means a ridiculous amount of electricity. Bitcoin mining is very costly and inefficient in Nepal, where electricity supply is unreliable and expensive. Furthermore, there is also the chance that natural disasters, power outages, hackers, or thieves will damage or steal part or all of your Bitcoin mining equipment.
In addition, Bitcoin mining has also brought its own environmental risks. Mining Bitcoins, more than anything, uses up a lot (more than most things, actually) of fossil fuels. And of those, coal is the most carbon intensive of all energy sources. While there might be a room for somebody to start the Bitcoin mining in Nepal, the country’s infrastructure is not yet developed enough to handle the emissions created by a large number of industrial activities such as a normal Bitcoin mining. Also, Bitcoin mining can affect local ecosystems and wildlife habitat. The use often leads to the use of lots of water for cooling purposes as part of the process and could further bear upon water scarcity and other water-related environmental problems. As well, the construction of mining facilities and installation of mining equipment may cause deforestation and habitat destruction in the region, alter the region’s biodiversity, and create long term environmental damage.
What are the alternatives for Nepali Bitcoin enthusiasts?
The prohibition of Bitcoin mining in Nepal hasn’t deterred the entity of Nepali Bitcoin enthusiast that wants to get or use Bitcoin legally and safely. Some of these alternatives are:
• Buying bitcoins from abroad: If you’re a Nepali citizen, you can buy bitcoins from abroad platforms or even from foreigners who’re accepting Nepali currency or other legal payment methods in Nepal. This option however may involve high fees or fraud risks or exchange rate risks.
• Using peer-to-peer platforms: Peer to peer platforms which connect buyers and sellers of bitcoins directly, without any intermediaries or fees can be used by Nepalis. But this might have security issues, trust issues or legal issues.
• Using VPNs or proxies: VPN or the Proxy can also be used by Nepalis to reach the platforms of bitcoin which are blocked or restricted in Nepal. But this can unfortunately be an option with technical, privacy or legal issues.
• Traveling abroad: Nepalis can use their services abroad in the countries that permit bitcoin services and can travel there. But that option has travel costs, travel risks, or legal risks.
They, however, also come with challenges and limitations. For this reason Nepali Bitcoin enthusiasts must be very careful while using it. They should also know the law and regulation in Nepal and the countries they are working with, and should respect them.
Here are some Bitcoin mining online platforms:
NiceHash:The Second method is to become involved with NiceHash; this is another cloud mining platform, where you can rent hash power from miners. In effect, you don’t have to buy any mining equipment and don’t have to worry about the technical aspects of mining. You simply start earning Bitcoin simply by renting hash power.
Genesis Mining: Another cloud mining platform is Genesis Mining and it presents different mining plans. There are plans here that cater to your budget and your level of hash power preference. Genesis Mining is also open to a free trial so you can test the platform out before buying a plan.
StormGain: StormGain platform which is cloud mining platform provides a free mining plan. Trading on the StormGain exchange will also get you Bitcoin. For beginners who don’t want to invest upfront and try mining Bitcoin with no risks, StormGain is a good choice.
Eobot: EEobot is a cloud mining platform that provides different mining plans including the plans especially for beginners. Also, Eobot guarantees 100% hash power so you will always get the hash power that you pay for, and rewards your fiat currency investments in reduced tangible assets alongside your bitcoin balance.
Some challenges for Bitcoin mining in Nepal:
- Illegality: Bitcoin mining is illegal in Nepal right now because the Nepal Rastra Bank (NRB) categorizes it as foreign exchange. In effect, anyone caught mining Bitcoin in Nepal could be subject to legal action.
- High start-up costs: To start a Bitcoin mining business in Nepal may be expensive since you will need something special equipment and infrastructure. The cost includes purchasing computers, cooling systems, along with whatever other equipment they need, as well as the expenses associated with renting or buying space to run the operation.
- Volatile prices: Like most crypto assets, the price of Bitcoin is volatile, meaning it’s difficult to know when you’ll profit. What this means is that your investment’s value can go up or down a lot in a short amount of time.
- Government regulations: In Nepal, buying a specialized graphics card for Bitcoin mining can be quite expensive and is likely to become even more expensive and makes Bitcoin mining difficult as well. So, this could be taxing, this could be licensing requirements, this could be a ban on Bitcoin mining.
- Environmental impact: Because of all this, Bitcoin mining is energy intensive, and not only of the time, but negatively for the environment as well. That’s because building a block in a Bitcoin chain requires the computers that do it to solve incredibly complex problems, and those computers are quite thirsty for electricity.
- Technical challenges: Even if bitcoin mining is a complex and technical process, there is a risk of technical problems — hardware failures, or software bugs, for instance. If they went away, you could lose your investment or even lose profits.
- Security risks: Hackers are targeting Bitcoin mining, as you may steal their Bitcoin, or cause to your mining to stop completely. In recent years, there have been a rash of high profile hacking attacks on Bitcoin mining operations.
Disadvantages of Bitcoin mining in Nepal:
- High start-up costs: Specialized equipment and infrastructure required in order to set up a Bitcoin mining operation in Nepal can make it costly to start. That includes buying computers, cooling systems, whatever else you need to run the operation, but also renting or buying space to put the thing together.
- Volatile prices: However, due to the volatility of Bitcoin price, it’s hard to know when to cash in and make money. With this, the value of the investment you have made can increase or decrease drastically in a short time.
- Government regulations: Such regulations would make Bitcoin mining harder or more expensive for those running it in Nepal. It can be taxes, a ban on Bitcoin mining, licensing required etc.
- Environmental impact: Many environmentalists on Twitter are concerned about how much energy is needed to support Bitcoin mining. That’s because solving complex mathematical problems takes a lot of electricity, and the computers used to solve those problems cost a lot to run.
- Technical challenges: Bitcoin mining is complex and technical and there is always the chance of technical things like hardware failure or software bugs. Such problems may cause the exhaustion of profit or even loss of your investment.
- Security risks: Hackers are a target for bitcoin mining and can steal your bitcoin or disrupt your mining operation. In recent years, Bitcoin mining operations have been hit by a number of high profile hacking attacks.
According to Nepal, bitcoin mining is not only illegal but also too risky, as the NRB has banned all crypto in Nepal which bitcoin is an integral part of. The legal, financial, technical and environmental costs of anyone engaged in Bitcoin mining in Nepal. As a result, Nepali Bitcoin fans should not venture into Bitcoin mining and instead search for some other means of getting or using bitcoins legally and safely. They also need to expect the Nepal government and the NRB to change their stance regarding the reality that is Bitcoin and now cryptocurrency, and to be progressive and supportive in the future.