Education
Is bitcoin mining in India legal? Miners simply do not know
After Anshul Dhir got a 400 percent return on Bitcoin in 2016, the Noida-based entrepreneur leapt with excitement and planned to explore the realm of digital currencies. He abandoned his government work and founded a company called Qadcore to provide industrial mining services. His parents were baffled, "Is crypto mining legal? Where are you going to make money? Fast forward to 2020, and is crypto mining legal?
In India, there's still a live problem. The sector has been hamstrung by a lack of clarification on the part of regulators and periodic clampdowns on mining activities.
In March 2020, the Supreme Court of India repealed the banking ban that barred banks and other financial institutions from promoting any virtual currency operation. As a result, trading volumes in markets like WazirX rose by 400 per cent. Dhir 's parents have now established their faith in the crypto ecosystem. Yet it's not sure what's going to happen to Indian crypto miners after the verdict. Would the government also lift the moratorium on importing bitcoin mining machines from ASIC in 2017?
The Supreme Court has provided a green light to cryptocurrency banking, but mining itself – a vital part of every early cryptocurrency country – is still under the cloud. Only lately, the sector has been rocked by news of a potential government moratorium. It's dangerous and strange to work in such an setting, Dhir said.
Though Dhir decided to start mining in India in the middle of turmoil, Bengaluru-based Akshay Bajaj, co-founder of AB Nexus, a financial consulting company for cryptocurrency, stopped mining when the government banned ASIC imports.
The latest equipment is required for mining, and when it was forbidden to manufacture machinery, we couldn't afford new ones, so finally mining had to be halted, he said. Around the same time, profit margins dropped in the post-2017 bear market, which prompted him to concentrate more on exploration than on mining.
Bitcoin mining is energy consuming. According to the Cambridge Bitcoin Electricity Usage Index, global operation absorbs approximately 60 terawatt-hours each year (in 2017, the planet consumed a total of around 25.000 TWh). Electricity costs usually reflect a high percentage of overall mining spending.
Power shortages are one reason why the government has outlawed ASIC devices, said Sidharth Sogani, CEO of CREBACO Global, a Mumbai-based credit rating and blockchain consulting company. India suffers from a lack of power, with millions of people still without reliable supplies. He also said the other explanation might be the unique integrated circuit of ASIC devices, which is only good for bitcoin mining and can't be used for anything else.
Nowadays, GPU mining is the only alternative left to Indian miners, but it is not lucrative and even then the legal status of mining in India is not certain.
The vocabulary of current laws does not help, said Pabitra Mohan Mishra, a lawyer at Finlaw, a consulting company in Mumbai. Words such as "money" and "mining" may be translated as printing new notes or mining coins, which is a government right and not for people.
Apparently, it is unethical to publish a note. Nonetheless, the law on crypto mining is still not very specific in India, and this is why some of the miners were jailed in 2017-18, and the cases are still going on, Mishra said.
Mishra warns citizens not to mine until new cryptocurrency rules are in effect. "Keep out of the crypto mining business in India. You should sell it, though.
