Recently the number of criminal activities around cryptocurrency usage has been rising. There have been many cases of illegal crypto mining. People involved in these activities find it as an easy way to make profits and that’s why Bitcoin mining is considered a well-paid hobby even in 2020. According to the ENISA threat landscape report, lots of countries experienced illicit crypto mining this year but Abkhazia has been the center of attention several times in the last few months with illegal crypto activities.
Abkhazia is a part of Georgia which is sometimes considered as a de facto state in the South Caucasus. While in Georgia crypto mining is one of the most attractive businesses, the same doesn’t apply to Abkhazia. Thanks to US-based company Bitfury, which is one of the leading blockchain developers, the cryptocurrency mining industry in Georgia is thriving. Although there have been many cases of successful crypto miners in Abkhazia as well, many of them ended badly as they got caught by the officials.
Does crypto mining really cause an energy crisis?
Currently, Abkhazia faces severe problems in the energy sector. The energy crisis has a very negative impact on the entire economy as it results in an increase in oil prices and suppresses opportunities for developing renewable energy. Probably the crisis has various reasons such as poor infrastructure but the government decided to blame crypto mining companies for the problems.
As the head of the region’s national energy provider declared, the increased crypto mining activity is the main reason why the energy sector of the region is suffering. However, this announcement doesn’t seem to change anything at all and crypto miners still continue to take advantage of the low energy costs of Abkhazia.
How does crypto mining look in Abkhazia?
Although crypto mining is a really popular activity in Abkhazia, it’s already considered illegal to take part in this activity. There was no official law against cryptocurrencies in the region until September, but now cryptos are officially restricted by the Abkhaz Ministry of the economy which developed a legal framework and provided a definition for crypto-mining activities. Even though Bitcoin and other cryptos are prohibited, crypto mining still flourishes in Abkhazia. Just as in Georgia, one of the main reasons for the increased popularity of Bitcoin can be attributed to the online gambling industry.
Adding BTC to some of the Georgian online casinos took a great part in increasing activity in the entire gambling industry of Caucasus. The number of players who started using Georgian casinos increased so much that in fact, the search surge for “ონლაინ კაზინო” which means online casino in Georgian, reached surprisingly high levels in Google Trends. Looking at this rate, we can easily conclude that Abkhazian online gambling venues can also take advantage of cryptos and rely their business on digital money transactions. That way they can actually overcome some economic problems. However, the government is not open to the idea and continues to blame bitcoin mining for the energy crisis in Abkhazia which has been there for so long.
Electricity problems keep worsening
The main reason why the government believes that the energy crisis is caused by crypto mining is that blockchain activity requires more power than the region is able to provide. In fact, according to the Abkhaz energy company Chernomorenergo, the total amount of power spent on crypto-mining operations is more than 40-46 megawatts. This number is so great that it can directly result in problems in the energy sector because a large part of Abkhazia is already in a deficit of electric power. Therefore, the government believes Abkhazia doesn’t have enough electricity to waste on activities that aren’t even legal which is why cryptocurrencies have been restricted.
However, local officials don’t consider banning cryptocurrencies as a solution and they are trying to develop other strategies in order to avoid a crisis. As authorities believe, lifting the ban on cryptocurrencies could solve the problem. Currently, they are considering officially allowing all types of crypto mining activities across the region of Abkhazia. Allowing cryptos may seem a little bit odd because simultaneously, they continue to blame crypto miners for the crisis, but they believe that lifting restrictions will improve communication between energy providers, crypto miners, and the local authorities.
This means that in the near future the legal framework about cryptos could change in this region and a completely new regulatory approach could be developed. As officials believe, removing the ban will give them the opportunity to supervise the mining facilities from closer and control the electricity supply more effectively.
Crypto-related activities have been considered illegal since 2018. Even though such kinds of things had been witnessed previously as well, this was the time when the government declared that frequent usage of blockchain technology was the main reason for the lack of capacity in the country’s electrical system. They believed that the religion needed a priority power supply to the population and for this, they just banned using cryptos. But in 2020 a great number of crypto mining activities will be witnessed in Abkhazia. Miners are probably not going to stop doing their business because crypto mining hardware is worth over $589,000. However, now things are highly likely to change. But still, it’s still not certain whether their so-called solution really solves the problem of electricity and overcomes the energy crisis in the region or not.