A state-run energy company in Abkhazia is calling for the regulation of cryptocurrency mining activities to avoid the partially recognized republic being plunged into darkness this winter.
According to Eurasianet, the cryptocurrency mining farms in Abkhazia, which are mostly located in abandoned Soviet factories, are guzzling a significant amount of electricity. As a result, it is feared that the shaky electrical network in the poor country which is located on the eastern coast of the Black Sea may not be able to handle peak consumption in winter.
“This [cryptocurrency mining] puts additional load on our grid, the transmission lines, and substations that are loaded to capacity even without it. If temperatures fall, there is a risk that electricity will not reach regular customers,” Aslan Basaria, the head of Chernomorenergo, a state-run energy firm, said.
Chernomorenergo is consequently now calling for regulations to be put in place on cryptocurrency mining to prevent power outages during the peak consumption season.
At the moment, most of the electricity consumed in the partially recognized republic comes from a hydropower complex Abkhazia shares with the country it broke away from 18 years ago – Georgia. However, due to the fall in water levels at this time of year and the rise in consumption during winter, cryptocurrency mining has complicated the situation.
Part of the reason why cryptocurrency mining in Abkhazia has become increasingly popular is the fact that electricity is cheap. Cryptocurrency mining is also seen a solution to the economic woes of the tiny unrecognized republic with a population of nearly 250,000 people and a GDP per capita of approximately US$2,000.
And since it is internationally isolated, with only Russia, Syria, Venezuela, Nicaragua, and Nauru recognizing it as a legitimate state, ‘cryptocurrency also offers the secluded region a chance to plug into an international money-making network.’ There are also reports that crypto is assisting Abkhazia skirt international restrictions consequently attracting investment and trade.
Placing restrictions on cryptocurrency mining in Abkhazia would come at a particularly difficult time for the sector across the globe. Earlier this month, CCN.com reported that the decline in the prices of cryptocurrencies has hastened the obsolescence of older mining rigs causing millions of them to be switched off.
Per research conducted by crypto exchange and derivative trading platform BitMEX, the hash rate of bitcoin has fallen by over 31% since November this year and this equates to 1.3 million Bitmain Antminer S9 miners getting turned off.
The prevailing bear market has also forced one of the largest bitcoin mining firms in the world, Canaan, to postpone its public listing while also slashing its IPO target from US$2 billion to US$400 million.
Featured image from Shutterstock.
Last modified: March 4, 2021 3:15 PM