Former Soviet Republic Is Primed For Crypto Mining, Despite Its Burgeoning Power Deficit
Georgia’s crypto mining economy has evolved into a global leader in recent years, largely because of low taxes and affordable electricity rates, as well as a libertarian regulatory environment.
Despite its small population, Georgia contributes nearly 1% of the industry’s total hash rate, according to a study by Arcane Research.
Although Georgia is a non-entity in the mining sector, the country boasts abundant hydropower and ranks seventh globally in the World Bank’s ease-of-doing-business index, ahead of Britain and Germany.
Georgia has a large number of Bitcoin miners, despite the country’s limited size and population.
The country has a total area of 69,700 square kilometers and a population of 3.7 million, excluding the occupied territories. Georgia’s capital and largest city, Tbilisi, is home to roughly 25% of its population.
What Makes Georgia A Crypto Mining Hotspot?
After spending six months in the former Soviet republic, Arcane’s analyst penned a piece on the country’s bitcoin mining business.
According to the report, the crypto mining business in Georgia consumes 125 megawatts, of which 100MW are allotted to Bitcoin mining.
Arcane suggested that Georgia’s true hash rate would be far higher than the 0.18% reported by the Cambridge Bitcoin Electricity Consumption Index (CBECI).
Based on Georgia’s overall crypto mining capacity, further study by Arcane found that the country actually contributes 0.71% of the total hash rate.
Two industrial-scale mining operations and an estimated 200,000 small home mining operations make up Georgia’s mining sector.
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Popping Up Like Mushrooms
Mining devices have sprung up across the country in recent months — from rural households to data centers operated by Bitfury.
Bitfury is a global company that owned a sprawling data facility in the Tbilisi Free Zone, a 17-hectare tax-free industrial area that was launched in December 2015 in the suburb of Gldani.
Subsidized electricity in mountain locations has lured many miners, much to the chagrin of local authorities.
The process of mining cryptocurrency is like minting real money, except that anyone with the right equipment and operating system can do it, by participating in a virtual competition that amounts to a massive virtual race.
In exchange for finding the correct answer on their computer, the owner of the computer is given “blocks,” which are digital units of bitcoin or another cryptocurrency.
These units are recorded and confirmed on the blockchain, which is a decentralized database.
115K Georgians Own Crypto
Cryptocurrency is now owned by about 115,000 Georgians, or over 3% of the country’s entire population, according to official estimates.
Since 2017, Georgia has become a net importer of energy because of an increase in local consumption and a lack of new generation capacity.
At present, Georgia is the world’s second biggest bitcoin mining country, trailing only China in terms of hashing power.
Even one Georgian political party has begun using supporters’ computers to mine cryptocurrency.
With electricity traditionally being more heavily subsidized in the Alazani Valley, the wine country has been experiencing a kind of digital gold rush.
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Featured image from Arcane Research, chart from TradingView.com