In the past couple of years, cryptocurrency has invaded Greece’s society, mostly because of high taxation and the pandemic. While the average Greek might not know what “bitcoin” means, interest in its mining has risen significantly.
In Greece, an estimated double-digit percentage of the population are into cryptocurrency trading in various platforms. Mining, on the other hand, is a much more expensive and energy-consuming business for Greek individuals.
“The cost of cryptocurrency mining equipment and the rising costs of electricity in Greece make crypto mining a prohibitive task for Greek citizens,” says civil engineer and entrepreneur Georgios Nolis. Big business, on the other hand, could attempt it with much greater ease.
Cryptocurrency is a form of digital money, completely decentralized and out of the reach of banks and national governments. It is recorded in a sort of digital catalog, and its maintenance demands huge amounts of electricity.
Mining is a process through which computers are being asked to solve extremely difficult mathematical riddles. These riddles demand top-notch computer equipment, thus even higher than usual amounts of electricity.
Cryptocurrency in Greece is often financially prohibitive
As an example, in order to maintain bitcoin‘s cryptocurrency mining system, it would need the yearly electricity consumption of the nation of Finland. As a result, cryptocurrency mining is unreachable for even an upper-middle-class EU citizen — and this is even more true in Greece.
“There is no methodology to measure the number of people or companies mining cryptocurrency in Greece,” says Nolis, the CEO of Lancom Ltd, a data collection and cloud service provider based in Thessaloniki.
Cryptocurrency mining is as anonymous as the currencies themselves, he says. “I am personally aware of a handful of miners in Greece who are amateurs. They are investing in between 1 and 10 mining rigs, the equipment needed for mining,” he adds.
There are even fewer Greeks who own so-called cryptocurrency “mining farms” and all of them are outside the country, mostly due to electricity costs. Professional miners usually employ a group of people to maintain and increase their investment. They utilize huge computers on a 24/7 basis.
And yet, last May, Bitcoin.com reported that “the interest in cryptocurrency from women in Greece had grown 163.67%.” This was the highest percentage in Europe, according to this particular study. The number of Bitcoin ATMs in Greece also increased to at least five around the country in 2020.
Miners’ gains and taxation with cryptos
Cryptocurrency mining is very expensive. An Ethereum cryptocurrency mining rig would require computer equipment costing close to €20,000. It consumes 4,800 watts, which means it would cost around €1,000 worth of electricity per month in Greece.
Ethereum’s average cost at €2,000 means that a miner can mine 65% of one cryptocurrency coin in 30 days. That is worth €1,600, which allows for a net monthly profit of €600 after electricity expenses in Greece.
Miners are usually paid by a so-called “Proof of Work,” verified by a transactions verification from a blockchain cryptocurrency network, like Ethereum. In other words, they are being compensated for their computer power and being paid in cryptocurrency.
Their fee goes into a digital wallet, where each miner can grow his share of cryptocurrency in Greece. If they want to collect real money, they have to sign up to a digital exchange office and change them into dollars, euros, or any other conventional currency.
Crypto gains can only be taxed if they get into the banking system. Once they are turned into Euros, and enter an account, the Greek state taxes them at the usual 22%.
For companies who own cryptocurrency accounts, the only way to avoid taxation is to exchange them with products that accept crypto payments. If cryptocurrency mining and use rises the way it has in the past two years, a source of unregulated, non-taxed transactions might become part of the financial norm.