Jan 26, 2019 02:30 UTC
Jan 26, 2019 at 02:30 UTC
Is Bitcoin Mining Legal or Illegal?
The Peer-to-Peer virtual currency Bitcoin made its debut in the year 2009, and the new era of cryptocurrency began.
While enforcement agencies, tax authorities as well as regulators worldwide are till now debating upon the best practices, one prominent question that is disturbing everyone is – Is Bitcoin Mining Legal or Illegal?
The answer to this question depends on the location and activity of the user.
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A Short Story of Bitcoin Mining
As we have previously discussed in How Bitcoin Mining Works? bitcoin mining refers to the process of keeping the record of transactions to a public ledger, however, the actual users can stay hidden behind anonymous names.
The ledger is known as Blockchain, and the transactions are recorded into blocks.
Now, the mining process refers to the creation of new blocks of the transactions occurred. Once a new block is created, it is added to the public ledger, aka blockchain. And, this is done by solving complex algorithms using computer processors.
With the passage of time, the algorithms have grown even more difficult. This means that it requires more computer power and time to create a block.
Initially, 50 Bitcoins were rewarded for mining a block, then the number turned to half, and now again half 12.5.
This is what makes mining more difficult and restricts bitcoin money supply.
Essentially, any process can be used to mine bitcoin. But, without a powerful computer processor, you won’t have much success.
These days, bitcoin-specific machines are available as bitcoin mining rig. They are machines particularly designed to mine new bitcoins by solving algorithms needed to create new blocks.
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3 Reasons Why Bitcoin Mining Is Considered Illegal?
- People believe that bitcoin mining is like counterfeiting money, which is not true at all.
- Some governments consider bitcoin as a thret, since it competes with national currencies.
- Bitcoin can can also be mined illegally, which is done by using malicious viruses to hijack people’s computer systems, and use their processor to mine bitcoins.
List of Countries Where Bitcoin Mining is Legal
- The United States
- United Kingdom
List of Countries Where Bitcoin Mining is Illegal
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Though Bitcoin is now almost 10 years old, there are countries which still don’t have explicit systems that restrict, regulate or ban the cryptocurrency.
The decentralization and anonymous nature of Bitcoin is what has challenged many governments on how to allow its legal use while preventing criminal transactions.
However, many countries are still analyzing the ways to regulate the cryptocurrency. Bitcoin, overall, remains in a legal gray area for many countries in the world.
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