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Is cryptocurrency mining still an activity that can be done anywhere from the comfort of your home, or are there certain countries that are more suitable for crypto mining than others? Certainly, some countries have already recognized the importance of digital assets and, consequently, the process of digital assets mining.
What should be crucial to anyone engaged in or planning to start their cryptocurrency mining venture are the following key questions:
- Does a specific country have modern crypto regulations?
- Is cryptocurrency mining legal?
- Do I have to mine crypto as an individual or can I do it as a company/entrepreneur?
- How can I reduce mining costs?
- Is there a country with favorable tax treatment for cryptocurrency mining and digital assets themself?
All of these questions are of paramount importance, and the focus of this blog post will be the Republic of Serbia, a country with a very favorable regulatory and tax environment for cryptocurrency mining and the IT industry as a whole. Why is Serbia a good environment for crypto? If we were to first establish that it is completely legal for individuals and Serbian companies to mine digital assets, that would only scratch the surface of why Serbia is an ideal place for cryptocurrency mining. Other important reasons and aspects will be discussed below.
Cryptocurrency mining, such as Bitcoin mining, is the process of creating and verifying new crypto transactions in the blockchain. Blockchain is a decentralized public ledger that records all transactions of digital assets. The so-called crypto miners play a crucial role in maintaining and enabling the workflow of the blockchain network.
Miners play a key role in verifying crypto transactions using their computational power. They essentially represent the infrastructure that allows the blockchain technology itself to function, also enabling its users to carry out all the crypto transactions. By using computational power and electricity, miners solve mathematical problems that underlie crypto transactions.
The mining of digital assets is based on a cryptographic algorithm used to solve complex mathematical problems. In the case of Bitcoin, the algorithm (protocol) is called “Proof-of-Work” and is used to verify transactions between the sender and receiver of Bitcoin.
All crypto transactions are grouped into blocks. So, each block contains a set of transactions waiting to be verified or executed. Once a block is verified, it is connected to the blockchain network with all the previously verified blocks, i.e., all already executed crypto transactions. Therefore, all transactions that have ever occurred are connected to the historical chain of crypto transactions, where the name “Blockchain” originates from.
When miners find a solution to a specific mathematical problem, they submit that solution to the network for its verification by other members. Other members then confirm the accuracy of the solution and the validity of the block of transactions. With this, the crypto block is verified. Once a block is successfully verified, it is permanently recorded in the blockchain as part of the historical blockchain transactions database.
It is important to understand that mining digital assets involve miners using their computational power and electricity to solve complex mathematical problems. The greater the computational power used, the more complex the mathematical problems being solved and the more the capacity to solve them. On the other hand, the more work you put in, the more costly it becomes.
The motivation for miners is to successfully mine, i.e., to acquire new units of digital assets! After a block is verified by solving complex mathematical equations, the miner who solved the problem receives a reward in the form of new digital assets. For example, in Bitcoin mining, a miner receives a certain amount of new Bitcoins as a reward for successful block verification. Once a miner receives a reward, the whole process starts again, and miners strive to provide the service of verifying crypto transactions to receive another crypto reward.
Given that mining has been known for many years and the crypto revolution has long been underway, it is important to note that mining digital assets has become highly competitive and resource intensive. These resources include powerful computers or specialized mining equipment, as well as significant consumption of electricity. Another important factor is that various cryptocurrencies use different algorithms for user-verified block confirmation, which can impact the costs of the mining process.
In short, mining is completely legal! Serbia is one of the countries that has regulated digital assets as virtual currencies and digital tokens through specific legislation. Serbian crypto regulation’s main goal is to regulate modern technologies based on blockchain and the business operations of service providers related to digital assets. In addition to the overarching law, tax matters have also been refreshed with new rules for taxing digital assets. Therefore, there are specific rules for taxing cryptocurrency assets for individuals, as well as crypto taxation for legal entities.
Thus, Serbia has established a comprehensive legislative framework that not only regulates general issues such as the concept and types of digital assets itself but also extensively addresses many other important aspects of business related to digital assets.
One of the most significant legal aspects is that the concept of mining digital assets is defined by law and explicitly determined as a free activity. Why is this significant? This is great news for miners because conducting mining activities in Serbia is permitted in accordance with general business rules. Therefore, this activity can be freely performed by both individuals and legal entities, without any other specific requirements that need to be met.
Cryptocurrency mining has become one of the most sought-after business ventures globally, and Serbia stands out as a destination that offers extremely favorable conditions for this activity. These are the reasons why.
Serbia stands out because it is legally established that you can engage in cryptocurrency mining, both as a legal entity and as an individual. This exceptional flexibility provides a wide range of possibilities for miners. Considering that mining is often a demanding and costly process, the option of conducting mining through a limited liability company (LLC) provides the founders of the crypto-mining companies with the assurance of limited liability.
By establishing an LLC, you can separate your personal property from the company’s property created through mining business activities, hence managing the risks more effectively.
On the other hand, if you choose to mine as an individual, you still have the option to do so in Serbia. This option may be suitable for individuals who do not wish to deal with any corporate business aspects related to a company. However, your mining income as an individual will be subject to your personal tax obligations.
In both cases, as a legal entity or an individual, Serbia provides the opportunity to engage in cryptocurrency mining in a way that best suits your needs and goals.
One of the main advantages of cryptocurrency mining in Serbia is the low costs of establishing and operating companies. The costs of establishing companies are relatively low, and the process for company formation in Serbia is done online, allowing for a quick and easy start for entrepreneurs, small and medium-sized companies, as well as independent freelancers.
It is also important to note that the tax treatment of corporate income tax in Serbia is favorable compared to most other countries that you may consider as business destinations.
In addition, Serbia boasts excellent infrastructure and a reliable energy system. The electricity supply is stable and among the cheapest in Europe, which is crucial for the uninterrupted operation of mining machines that require a continuous power supply. Furthermore, Serbia’s mild climate provides ideal conditions for utilizing solar panels, allowing miners to leverage renewable energy sources and further reduce their costs.
Good infrastructure connectivity within the country can be of great importance if starting mining operations in the countryside. The relatively low property prices compared to other European countries make initiating crypto businesses in the countryside areas a viable option.
When the low property prices, good infrastructure, and the possibility of installing solar panels are combined, this business model becomes a real opportunity for interested crypto miners!
Domestic legislation in line with the green agenda has adopted numerous modern regulations on green energy. For instance, if you plan to mine as an individual and reduce electricity costs by partially financing your business venture through renewable energy sources, you have the option of becoming a “prosumer.”
A prosumer can be any individual or household that consumes electricity while simultaneously participating in electricity production, such as by installing solar panels. In this way, miners have the ability to directly impact their electricity consumption by reducing their electricity bills by the amount of energy produced by the installed solar panels.
Serbia has highly skilled professionals in many fields, especially information technology experts who can provide support and expertise to crypto businesses. This trend is growing year by year, with an expected increase in the presence of IT professionals who understand mining and blockchain concepts, as well as other modern information technologies, making the initial investment or relocation of the business to Serbia highly rewarding in the future.
Highly qualified experts meet the needs of the developed IT industry in the country. Serbia has a developed information technology industry with numerous companies specializing in IT services and various other activities involving cryptocurrencies.
What makes cryptocurrency mining particularly attractive in Serbia is the vibrant crypto community and support for blockchain technology development. The country hosts numerous events, meetups, and conferences that bring together experts and enthusiasts in this field.
This dynamic community provides opportunities for knowledge exchange, networking, and collaboration with other professionals. Connecting with like-minded industry peers brings new ideas, inspiration, and support for the growth and improvement of mining operations.
If you are a miner planning to exchange your digital assets for fiat currency or other digital assets, you can do so in Serbia through officially licensed cryptocurrency exchanges.
Using the services of licensed cryptocurrency exchanges provides greater legal security to their users and legal ground for the crypto itself, making it another advantage that Serbia offers to both miners and all other cryptocurrency owners.
Serbia stands out as a country that continuously introduces numerous tax incentives and subsidies for both domestic and foreign citizens.
These incentives include various benefits, such as tax exemptions for digital nomads, reduced personal income tax for individuals under 40 years old, as well as numerous other benefits and financing options for companies through digital assets. Additionally, for both individuals and legal entities, there is the possibility of tax exemption from capital gains tax if funds obtained from the sale of digital assets, such as cryptocurrencies and digital tokens, are invested in the share capital of a company.
Upon becoming a tax resident of Serbia, you gain access to many other rights and benefits that were previously available only to companies operating in Serbia in previous years. Detailed information about these and other incentives can be found on our blog, providing a comprehensive overview of tax incentives in Serbia.
If you are a foreigner considering relocating to Serbia, we have great news for you! Serbia has defined numerous grounds for granting temporary residence and work permit in Serbia. Some of the popular grounds include employment, business activities, education or learning the Serbian language, studying, professional specialization, family reunification, ownership of real estate in the Republic of Serbia, and more.
Whether you want to obtain residence in Serbia through company formation or sole proprietorship or you want to purchase real estate to start your cryptocurrency mining venture, there is a simple procedure for obtaining a residence permit and subsequently a work permit.
Furthermore, the announced amendments to the Law on Foreigners in the Republic of Serbia will further facilitate the conditions for obtaining temporary residence from 2024. Some of the benefits include a unified procedure for obtaining residence and work permits, as well as the extension of these permits from the current one to three years of validity.
All of this may be of great importance if you intend to establish a cryptocurrency company or if you plan to purchase real estate to start your digital asset mining venture. The good news is that you can obtain temporary residence in Serbia based on both of these grounds.
Serbia stands out as a country that provides a favorable environment for cryptocurrency mining. Flexibility in conducting this activity, low business costs, stable infrastructure, and support from the crypto community make Serbia an attractive destination for cryptocurrency miners. With the opportunity to utilize renewable energy sources such as solar panels, Serbia opens the doors to the profitable and sustainable mining of digital assets.
 Eurostat data, available at: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Electricity_price_statistics
 National Bank of Serbia database: https://www.nbs.rs/sr_RS/ciljevi-i-funkcije/nadzor-nad-finansijskim-institucijama/digital-imo/reg_di/
 Text of the proposed amendments to the Law on Foreigners available in Serbian at: https://www.paragraf.rs/dnevne-vesti/040423/040423-vest15.html