Tax breaks, land deals and cheap energy have spurred crypto currency mining in Georgia, which wants to become a digital data leader.
Georgia is now the third largest Bitcoin miner in the world, behind China and Venezuela. The scale of mines pursued by crypto currency farms in the small country is such that it is "sucking up the electricity grid" as businesses account for around 10% of the country's electricity consumption according to some estimates.
Reportedly, the problem is particularly acute in the Svaneti region, where consumers are exempt from paying electricity due to harsh living conditions: the situation has favored the development of bitcoin mining companies in the gray economy "sponsored by senior officials ”according to the premises quoted by the newspaper Kommersant.
David Chapashvili of Green Energy, an environmental lobbyist, was quoted in a podcast recently for criticizing the practice of crypto mining currency for how much electricity it consumes.
Huge mining farm
According to documents presented by the Green Energy representative, a BitFury-owned Bitcoin mining farm is "ridiculing" 4% of the country's electricity, or 389,7 million kWh in absolute terms.
Chapashvili says the country actually has no understanding of the total impact that crypto currency mining is having on its energy use.
"There are many micro-miners," he said. "If you ask a very simple question to the ministry how which sector is consuming [energy] Georgia doesn't have this kind of analysis."
“People were left without electricity for almost a week because of the Bitcoin mining that caused protests. We held talks with miners in one of the villages and agreed that they would stop working. But this can happen again tomorrow and the day after tomorrow, ”said the governor of the city of Mestia in Svaneti, Kakha Zhorzholiani.
What the IEA says
A report from the International Energy Agency (IEA) says that over 80% of Georgia's energy source comes from their hydroelectric plants. The company believes that crypto currency activities help drive the use of the renewable energy sector. In other words, the Bitcoin mining industry helps to use energy without problems such as energy shortages, especially when Georgia uses only 25 percent of their green energy potential. Perhaps Georgia may be a new safe haven for crypto currency mining in the future.
Georgia is a net importer of electricity and experiences a profound seasonal energy production deficit during the winter when its hydroelectric production capacities cannot cover demand. Placing cryptocurrency mines near power plants to capture consumption peaks would seem an option, but strengthening interconnections with Turkey and other neighbors from which to export surplus electricity over the summer seems a much better option. Furthermore, even if the country has huge undeveloped hydroelectric capacities, their development poses significant environmental problems.
