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The Government of Abkhazia Blames Crypto Mining for the Energy Crisis

21 September 2020 08:55, UTC
Denis Goncharenko

Abkhazia is a de facto state in the South Caucasus, which has been facing energy problems for the past years, to date. Crypto miners are facing backlash and blame from the head of national energy providers in the region for being the cause of the nation’s energy crisis.

Jam News reported that the government placed a ban on crypto mining a year ago, which has been ignored by a majority of local authorities, who have neither respected nor enforced it, as miners continue exploiting the region's low energy prices.

07-09-2020 18:30:38  |   Regulation
The director of Abkhazia’s energy company, Ruslan Kvarchia of Chernomorenergo operational and technological management, said that over 40 to 45 megawatts of total capacity are consumed by the heavy mining equipment operating in the area. Thus an energy limit was put in place, restricting the miners from using up cheap electricity. Annual statistics of energy consumption showed that the miners are capable of consuming over 400 million kilowatts an hour, which causes the extensive energy shortages in Abkhazia. The increased deficit for the rest of 2020 rounds up to over 704 million kilowatts an hour.

Despite that, local officials are thinking of other ways to further solve the energy crisis in the country rather than regulating the activity of crypto miners. The administration is thinking about lifting the restriction and permitting all crypto mining exercises over the area. According to the government, allowing miners to operate during the day could improve contact between the concerned parties. Which are the miners, energy providers and the local authorities.

According to the administration, cancelling the ban will ensure close surveillance of mining companies, thus leading to better control over electricity supply.

Since the beginning of 2020, Abkhazia has experienced a flood of many new miners getting into the crypto mining activities, regardless of the fact that since 2018, crypto-related activities have been deemed illegal in the region. Mining equipment worth over $589,000 has been imported into the region, according to reports from custom officials.

Image courtesy of Cryptoknowmics