Last updated on January 2nd, 2018 at 12:00 am
The brief response: Ter most cases, bitcoin mining is flawlessly legal. Ter a few countries, however, bitcoin mining, spil well spil the possession and use of bitcoin is illegal. If you live ter North America and most of Western Europe, bitcoin mining, spil well spil possession, is not only legal, but local regulatory frameworks actually provide certain protections and basic oversight.
Ter many cases, bitcoin is not treated spil a currency by governments, but instead spil an asset or property. Spil such, bitcoin is afforded some legal protection, just like any other type of property. Te most cases, national governments that have not outlawed bitcoin, have not passed laws regarding bitcoin mining. Globally, with only a few exceptions, bitcoin mining is generally considered to be legal.
Before digging into the legal issues, I’m going to offerande a epistel overview of bitcoin mining. If you’re already familiar with the mining process, feel free to skip ahead.
The Brief Story: What is bitcoin mining
Bitcoin mining refers to the process of adding transaction records to the public ledger. Basically, every bitcoin transaction everzwijn conducted is recorded ter the public ledger, albeit actual users can remain hidden behind anonymous names. This ledger is called the blockchain, and transactions are organized into blocks.
The mining process refers to the creation of fresh blocks of transactions. Once a fresh block is created, it is added to the blockchain, AKA public ledger. This block is created through solving algorithms with rekentuig processors.
Overheen time, the algorithms have grown progressively more difficult, meaning more computing power and time is now needed to create a block. Further, approximately every four years, the number of bitcoins rewarded for creating a fresh block is cut ter half. Originally 50 bitcoins were rewarded for mining a block, then 25, and now 12.Five. This makes mining more difficult and restricts the bitcoin money supply, and overheen time should lead to bitcoin little by little gaining value.
Essentially, any processor can be used to mine bitcoins, but without a powerful processor, you won’t have much success. Now-a-days, there are bitcoin-specific machines called bitcoin “mining equipments.” Bitcoin mining equipments are machines that are designed specifically to mine fresh bitcoins, or ter other words, solve the algorithms needed to create a fresh block. Ter order for mining to be economically feasible, it’s significant for the equipments to run on spil little energy spil possible, and to solve the algorithms spil quickly spil possible.
So Why Would Bitcoin Mining Everzwijn Be Considered Illegal?
This is a complicated subject, and the reasoning can vary from jurisdiction to jurisdiction. Sometimes, people falsely believe that bitcoin mining is like counterfeiting money, but this simply isn’t true. You’re not creating fake duplicates of a national currency, but instead creating an entirely fresh currency.
This last bit is also why some governments oppose bitcoin, and thus bitcoin mining. Some governments view bitcoin spil a threat because it competes with national currencies. Some governments believe that bitcoin actually undermines the government itself by suggesting a non-state currency.
Bitcoin can also be mined illegally. Perhaps the most common example has bot the use of malicious viruses to hijack people’s computers and to then use their processors to mine bitcoins. This can slow down computers, and also run up energy bills. This is illegal te essentially every jurisdiction.
Where is Bitcoin Mining Illegal?
Bitcoin mining, spil well spil the possession and use of bitcoin, is illegal ter a few countries. Te other countries, bitcoin use and mining is more ambiguous with the government sending mixed messages.
Bitcoin is presently banned ter Russia, albeit the most latest legislation to geobsedeerd bitcoin use and mining wasgoed actually withdrawn. The reason for the withdrawal seems less about outlawing bitcoin, and more overheen the extent of penalty. Some Russian authorities want people who use bitcoin to face multi-year sentences te jail. Others are advocating for a softer touch. The legal status around bitcoin mining is a bit ambiguous since no formal laws have bot passed, but for now mining ter Russia is a high risk proposition, at the very least.
No other country is spil anti-bitcoin spil Russia. Of course, Russia is known for being a relatively authoritarian country. On top of that, Russia has bot fighting through an economic depressie caused by low oil prices, and sanctions instituted because of Russian activities te Ukraine. Part of the strong anti-bitcoin sentiments te the country may be due to efforts to protect the ruble, which has suffered massive inflation overheen the past few years.
Te South America, Ecuador explicitly outlaws the production of digital currencies, but interestingly enough, has launched its own digital currency. The electronic currency is linked to the U.S. dollar (which is Ecuador’s official currency), and has bot designed to decrease dependence on physical money, and the associated costs, such spil wear and rip of the bills themselves. Ecuador evidently doesn’t want other digital currencies, such spil bitcoin, challenging with their own.
The reasons for outlawing bitcoin aren’t always authoritarian te nature. For example, Iceland presently prohibits trading the local kroner for bitcoins. This is because the Icelandic economy struggled te the years following the Superb Recession, and authorities instituted capital controls te order to protect the kroner. Authorities were worried that people would essentially flee the kroner, and that the currency would be adversely affected. Iceland does not, however, prohibit the mining of bitcoin.
Other governments, like the Indian government, have made negative remarks against bitcoin but have not launched any official bans on ownership or mining. For now, mining bitcoin te said countries is generally legal and safe, but the regulatory environment could switch quickly.
Legal bitcoin mining
Te most countries, bitcoin mining is legal. Of course, there are legal ways to mine bitcoin, which generally means using your own resources, such spil electro-stimulation and processing power. On the other forearm, there are illegal ways to mine bitcoin, such spil stealing said resources. Te this case, mining bitcoins is legal, but you’re stealing the resources needed to mine them, which is illegal.
Also, prosecutors te various countries, such spil the United States and South Korea, have made it clear that they will prosecute people who use bitcoin for illicit purposes. This should come spil no verrassing, and anyone who mines bitcoin or uses it should know not to conduct illegal activities.
By and large bitcoin mining is a ideally legal activity. Even te a few countries that do regulate the use of bitcoin, such spil Iceland, mining bitcoin is still legal. Many countries, including most African countries, have not passed any legislation for or against bitcoin, and have generally remained silent on the kwestie. It’s significant to keep a close eye on thesis countries, because the regulatory environment could switch at the druppel of a hat.
Please keep te mind that this postbode does not substitute legal advise and you should raadpleging a lawyer for your specific case and jurisdiction.