Using Shodan.io, the nefarious way to map IoT devices left unsecured on the web, we can map instances of “antminer” mining, the primary tool for Bitcoin mining. What’s interesting to me is the list of Top Countries:
- Vietnam, with 168 Antminers (population ~92 million)
- Russia, with 138 (pop. ~144 million)
- US, with 130 (pop. ~300 million)
- Venezuela, with 79 (pop. ~31 million)
- Korea, with 44 (pop. ~51 million)
Mapping Ethereum miners is interesting as well. The clear winner is Ukraine (pop. 45 million), with 46 instances of Eth miners running. Next is Korea with 19, and then Venezuela and Vietnam. While this map-list is not a a perfect science, I’m sure it provides an interesting sample of the total (unsecured IP miners + secured) miners in each of the regions of the world. China is probably a leader as well, but its Great Firewall makes measurement more difficult.
So why are Venezuela, Vietnam and Ukraine disproportionately active in Crypto-mining in comparison to their relatively small populations?
Let’s start with the simplest to explain: Venezuela
Venezuela, despite its major oil resources, has turned into a socialist kleptocracy. Its corrupt dictator has embraced panicked money-printing in attempt to falsely re-stimulate the economy. Money/value at its core is a kind of illusion based on perceived scarcity. When one man, Maduro, can undermine the scarcity aspect of money on a whim, the illusion aspect of value starts to feel very real for the people in his corner of the world.The collapse of the bolivar is the obvious reason for its citizens’ attraction toward a digital currency outside direct political jurisdiction (and that cannot be cut-off from political sanctions unlike the USD). Even Maduro himself now wants to create a “national cryptocurrency” to evade US sanctions and to save itself from inflationary economic doom.
Venezuela is not really a surprising part of this list, as its affinity for Cryptocurrency as a solution to failing central banking has been widely broadcast in the news lately. What is interesting/surprising is Vietnam as the crypto-mining world leader.
So why is mining extremely popular in Vietnam?
Vietnamese officials have declared Bitcoin to be illegal.
Other than that declaration, I cannot find many news headlines about the status of Bitcoin in Vietnam. Yet, it tops the list for mapping Bitcoin miners across the world.
Let’s now study the steadily devaluing Vietnamese currency, the dong. As per this Forbes article, “According to the Asian Development Bank, Vietnam has increased its money supply by approximately 40% between 2012 and 2014. ‘Again, laws of supply and demand say that dramatically increasing the supply of something will drive down its inherent value.” It also seems as if Vietnam officials have a tight hold on currency exchange, since it is notoriously difficult to exchange Dong for USD (according to that same article).
Similar to Venezuela, Vietnam has many state-run industries that are at high-risk for corruption- particularly nationalized banks. While I don’t think this has boiled over to a full-fledged crisis yet, perhaps Vietnam will become the next failed state after Venezuela. It would certainly be interesting if the populations embrace of cryptocurrency (despite its governments public reporting) is a pre-indicator of impending crisis.
This is only speculation, but there is certainly something strange going on with its extremely high frequency of Crypto-mining. And perhaps, these miners will use cryptocurrency for its idealized purpose: as a safe-haven asset against political/economic death spiral. Even better, cryptocurrency will help the country avoid a total collapse. Similar to the collapse which has consumed Ukraine.
Which brings us to Ukraine as the most popular Ethereum mining country:
Brutal.
The economic reasons for Ukraine’s affinity for cryptocurrency is as obvious as Venezuela. Russia imposes many forms of economic/political warfare over this wartorn country (including restricting USD supply)- and its currency has lost nearly 2/3 of its value ever since. It is a great tragedy, and I’m certain that cryptocurrency is being used as a tool to circumvent this economic stranglehold, in a way that is impossible for USD.
Historically the U.S. Dollar has tried to establish itself as the world’s reserve currrency, and I think it has thus succeeded in many ways in other situations. For decades, I and many others believe that the dollar’s proliferation into every corner of the world has allowed a safe-haven asset for world citizens against many forms of local central bank negligence, and has also helped eliminate a degree of global economic friction. However, according to Travelex (which benefits greatly from the trade between them), there are still 180 different currencies in the world, and USD cash can only travel so far so fast. And the longer the travel-time, the more that dollar has inflated or has been taxed in exchange.
Worst of all, USD as a reserve currency can be cut off by political strangleholds, as is the case in Communist Vietnam, in Socialist Venezuela, and in wartorn Ukraine.
So while paper USD may have sufficed for globalizing the 20th century, it is a wildly medieval solution for the 21st. Furthermore what’s even more disturbing, is that I believe the 2008 Financial Crisis and its ensuing money-printing, has gone on to fray at the value of the USD itself. When the “safe-haven asset” of the entire world is no longer safe, then the world will have a real problem.
US Monetary Supply
The Asia Development Bank’s commentary on the Vietnamese dong about how the “laws of supply and demand say that dramatically increasing the supply of something will drive down its inherent value-” sounds eerily relevant to the US Dollar itself.
Therefore, I hope that Bitcoin and cryptocurrency can rise above its own dysfunction to become a universal safe-haven currency, based in deflationary economics, allowing instant/low-cost/easy transactions- that can’t be cut off by any political/geographic boundary.