Georgia Becomes Eurasia’s Crypto Mining Hub

Rage Comment : Cryptocurrency mining in Georgia is second only to China in profitability, because of lax regulation, cheap water and electricity, and even independent miners who use mining to subsidize their income. And the bright future brought by the potential of this technology also makes people here yearn for it. But at the same time, the large amount of electricity consumed by mining still causes some officials to worry, while others actively participate in mining profits. In any case, many miners around the world currently regard this place as the global mining center.

Translation: Annie_Xu

When people think of Bitcoin mining, they often look to countries like Iceland and mainland China. But most people don’t know that the small Eurasian country of Georgia is the second most profitable region in the world for cryptocurrency mining, second only to China.

Cryptocurrency miners flock to tiny Georgia

Georgia is known for its wine, but these days the region is also known as a thriving cryptocurrency mining hub where entrepreneurs are looking to cash in. Georgia is a monoethnic democracy located at the crossroads of Eastern Europe and Western Asia. Over the past few years, bitcoin and cryptocurrency miners have been flocking to Georgia because of the country's lack of regulation and cheap water and electricity.

According to a recent NPR report, the US-based company Bitfury once had the most mining facilities in Georgia, but also had many other smaller operations. The company’s Georgian mining facilities were located outside the Tbilisi region, but the company’s main data site was recently sold.

Many home-based miners have set up businesses in Georgia, such as Tel Aviv resident Bezhani Buzhaidze, who supplements his income by mining Bitcoin and Zcash. Buzhaidze explained in a recent interview that he earned about $800 every thirty days last year from mining Zcash, and the electricity cost here is only $80 per month. Buzhaidze explained that a quarter of his friends are also involved in the mining industry in Georgia. And cryptocurrencies have also brought Georgians a dream that one day this technology will unleash a global free market without crony capitalism.

"We won't need banks anymore. This will be good for society."

Georgian Bureaucracy and Bitcoin Mining

Even though regulation here is looser than in other countries, the Central Bank of Georgia has issued a statement to potential retail investors that cryptocurrencies may be "risky investments." However, many Georgians want the digital currency industry to thrive in the country, and recently a political party has begun cryptocurrency mining to finance its election campaign. However, Bitfury's annual electricity bill estimates show that the company uses 28 million kilowatt-hours of Georgian electricity every thirty days, which makes some party leaders uneasy.

Some opposition officials have also claimed that former Georgian Prime Minister Bidzina Ivanishvili was secretly working with Bitfury. Public records show that a fund associated with Ivanishvili's investment arm allowed Bitfury to take out a loan, but the loan has been fully repaid, according to a Bitfury lawyer, who explained that "there is no financial relationship left." However, local news such as Georgia Today still describe Bitfury's George Kikvadze as an active member of Ivanishvili's investment vehicle. The company has since sold its main data facility in Georgia, but still runs a small mining operation and leases the land for the data center. This week, Blockchain data revealed that Bitfury accounts for 1.8% of Bitcoin's global hash rate.

Exploiting Georgia's energy sector is highly profitable, as the region's electricity costs about 4-6 cents per kWh, according to Galt & Taggart research. There are 22 hydroelectric plants under construction and 72 completed. Global cryptocurrency miners are now seeing the country as a profitable region to set up operations here, as Georgia is steadily becoming a hub for digital currency mining.