While China and the United States are vying for the number one spot when it comes to crypto mining measured in hashrate, one country looks to lure crypto miners with tax breaks.
When you think Brazil, you may think soccer, iconic carnival-style festivals, sandy beaches and the Amazon river, but Brazilian Congress is thinking about crypto, as a recent article points out.
We know money talks, and tax breaks are a great way to incentivize growth in certain sectors; the fact that Brazil is even tabling a crypto-positive bill is a great piece of news. However, this one caveat, we’ll explain..
You may be surprised to know that Brazil touts and estimated 10+ million people (4.9% of their population), currently own cryptocurrency (1). That puts Brazil fifth on the list of total crypto ownership - pretty surprising when you add in that nearly half of these holders earn less than Brazil's minimum wage.
Personally, we were surprised to find this out, but the dots start to connect when you realize that Brazil ranks fifth in worldwide smart phone usage. Just goes to show you the power of cryptocurrency, all you need is a smart phone and a data connection to join this amazing technology.
1. According to triple-a.io
Opening up a can of worms and researching Brazil crypto on social media show quite a few inspiring messages.
Recently, Brazil's largest exchange added support for SHIB. Regardless of your thoughts on this self-proclaimed "Doge killer", this listing represents a milestone in terms of crypto adoption in Latin America.
Keep in mind that not all cryptos are created equal and many have their own unique "mining" methodologies, however this explanation applies to the majority.
To put it simply, crypto mining is using computation power to solve complex puzzles.
Every transaction on a blockchain must be facilitated by a miner, who solves a very labor-intensive math problem to add the next block to the blockchain. Once a block is added to the blockchain ledger, it becomes public and permanent.
Why would a miner...mine?
In most cases, take Bitcoin for example, the lucky miner who successfully solves the math problem is awarded some Bitcoin. At the time of this writing, the reward for successfully mining a block is 6.25 Bitcoins. That's pretty lucrative!
Before you start scouring the internet for some mining equipment, keep in mind that most blockchains re-adjust the difficulty it takes to mine a block based on the computation power being thrown at it. With as popular as Bitcoin is, it takes a ridiculously expensive amount of hardware to even have a chance at successfully mining a block - it's why most people acquire their coins through simply purchasing them.
For more, Google "what is bitcoin mining". Bitcoinmining.com gives a great thorough explanation.
As mentioned above, if you are mining the more lucrative coins (BTC, Eth), you need some serious hardware... seriously expensive that is.
Brazil's new bill proposes a tax exemption on imports of computer hardware used to mine crypto. This would take a large burden off new companies looking to enter the mining space in Brazil and has some speculating that Brazil could soon challenge the US and China as the top mining spots in the world.
If the bill passes there is one caveat, all mining operations must prove that they are powering these computers with renewable energy sources. A quick Google search shows us that Brazil utilizes 83% renewable energy sources with the most prevalent being hydroelectric power. (Others include wind, biomass and solar)
While it's possible this bill will die on the floor, regardless of the outcome, the fact that Brazil is got crypto on the brain has to be a good thing for crypto's success worldwide. What say you?