While the value of the cryptocurrency is again gaining traction in August, the high energy cost of bitcoin mining has frightened off most local players.
According to Filip Pawczyński, the vice-chairman of the Polish Bitcoin Association, the cost of mining locally, estimated at USD 6,931 by Elite Fixtures, puts Poland among the more expensive places in the world to produce the coins.
Around 90 percent of the running costs of bitcoin producers are clocked up by electricity to power and cool the computers which create the complicated algorithms that underlie cryptocurrency.
In February Elite Fixtures compared the energy costs of production around the world. Venezuela came out as the cheapest location thanks to the heavily-subsidised cost of energy, which made the troubled Latin American country twelve times cheaper than Poland at USD 531 to produce a coin, a process that takes between 550 and 2,200 days.
By comparison, the cost incurred by Ukrainian producers was USD 1,852. In Germany, the cost per coin was USD 14,275.
With the market value of Bitcoin hitting nearly USD 12,000 last week and still above USD 11,390 on Tuesday, the question of whether production was likely to return to Poland on a large scale is considered unlikely.
However, as mining is now controlled by very large producers able to reduce costs through sheer scale, such as CloudHashing, which has partially relocated to northern Iceland, where it can cool its machines cheaply using arctic air, chances of serious production in Poland are slim.
Once bitten, twice shy
The local cryptocurrency market has been in the spotlight since the collapse of Bitmarket.pl, a trading platform which marketed itself locally despite being registered in Estonia and managed in the UK. Polish investors’ bitcoin accounts disappeared overnight in early July when the platform informed users it was ceasing trading.
The local regulator, the Financial Supervisory Authority (KNF) came under criticism from aggrieved investors, for not regulating the market. Despite attacks, the KNF officials, who had carried out a publicity campaign to warn the public of the dangers of the market in 2018, stuck to earlier assertions that the cryptocurrency market was not in its sphere of influence.
The body of one of the founders of Bitmarket.pl was found dead in a lake in Northern Poland. Investigations continue into the background of the suspected suicide and the disappearance of the funds.