Record-high electricity consumption blamed on illegal crypto farms in northwest Georgia has drawn the attention of authorities in the capital, Tbilisi. The central government and local utilities are addressing the power shortage in the mountainous region of Svaneti.
With tourism hit by the pandemic, people in Georgia are turning to cryptocurrency mining on cheap energy
The government of Georgia, a small country in the Caucasus, has joined forces with the energy distribution company Energo-pro, to tackle the increasing illegal use of electricity for crypto-mining in the Svaneti region. The move was announced by the country’s Minister of Economy and Sustainable Development, Natia Turnava, at a press conference this week.
The news agency “Novosti Georgia” reported that the unusually high consumption of energy by mining farms in the historical region of the town of Mestia has been a hot topic for a whole month. Svaneti has attracted miners through the low electricity prices offered to companies operating in the mountainous region. Residents of Mestia have access to free electric power.
Until the end of December, the inhabitants of Svaneti had to put up with a limited power supply system. Underground crypto miners have been blamed for the shortage and damage to the power grid. Minister Turnava commented:
Of course, illegal consumption of electricity is not acceptable, especially the problems of home mining that exist there. We are working with the local government, as well as with Energo-pro Georgia which supplies electricity to Svaneti, to gradually solve this problem.
Residents of Mestia staged several demonstrations calling for the closure of mining farms and accusing the local authorities of protecting the miners. Meanwhile, Energo-pro Georgia has threatened to increase electricity tariffs for the region. Despite this and protests, consumption has not yet decreased.
“Compared to previous years, consumption has grown by 237% this year,” the Mestia municipality revealed in a statement last month. Local authorities have also urged residents involved in minting cryptocurrencies to abandon this activity.
Natya Turnava hoped that residents of the area would not risk jeopardizing the tourist season. With its beautiful landscapes, medieval towers, and ancient traditions, Svaneti and Mestia have attracted thousands of visitors in the past decade. However, with the number of tourists declining amid the Covid-19 pandemic, locals have found an alternative source of income in mining.
Georgia became a mining hotspot several years ago when the country ranked second in terms of profitability for bitcoin miners after China. According to a 2018 study by the Cambridge Center for Alternative Finance (CCAF), the nation also ranked second in terms of electricity consumed for cryptocurrency mining. As of August 2021, its share of the global average monthly hash rate was 0.18%.
Do you think that the Georgian authorities will be able to solve the problems of electricity supply in the Svaneti region? Tell us in the comments section below.
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