Coin Miners Eye Ex-Soviet Countries

Soaring energy consumption prompts coin miners to look for cheaper alternatives. But where?

by Kyzmoff
08 May • 2 min
In Mining

With the recent explosion of cryptocurrency prices, mining coins have evolved from a hobby for the average guys who used to mine Bitcoins on their personal computers to cover some expenses at the end of the month to a professional business for large corporations, mainly from China, that almost completely monopolized the sector. 

This led to a skyrocketing energy consumption which means that profit-hungry companies need to relocate where energy is cheaper. The ex-Soviet states are establishing as contenders for a chunk of the sector.

 

Consumption-chart

Georgia

While turning to larger countries for cryptocurrency mining, many overlook the small ex-Soviet state of Georgia. With a population of less than four million, many underestimate the nation's importance in the crypto world, but surprisingly it comes second in the billion dollar mining industry, after China. 

Due in part to the region's excess hydropower and supportive regulations, Georgia has taken cryptocurrency adoption to the next level. In addition to the wide-spread usage of digital coins in the country, Georgia partnered with US-based mining giant BitFury to introduce a blockchain platform for a property rights registry, thus becoming the first in the world to record land titles using blockchain tech.

BitFury, one of the world's largest mining and blockchain solutions companies, has built an 18 hectares mining facility in Tbilisi, for which it benefits tax exemptions. One of the many reasons why Georgia is ranked ninth out of 200 in the World Bank’s “Ease of Doing Business” survey. 

While BitFury's electricity costs are unknown, the average cost of electricity in Tbilisi is around $0.08 per kWh. With little to no taxes paid and the low cost of electricity, the country with a GDP of $17 billion, is emerging as one of the world's most attractive cryptocurrency mining locations.

 

Armenia

Although Georgia is far ahead in the global bitcoin mining sector, Armenia is looking to get in on the action, as well. Recently, Armenia approved new supportive legislation for bitcoin mining. In the initial draft, it was even proposed that bitcoin miners would be allowed to operate tax-free until 2023.

Additionally, the Armenian Blockchain Forum promotes the idea of creating a free economic zone to host international AI, the blockchain, and tech projects similar to the Meghri free economic zone, which was launched in December 2017. Mining equipment distributor ECOS-Mhas already revealed intentions for a large data center in the Meghri free economic zone, using thermal energy to power the project, with plans to scale up for the upcoming years.

 

Other options in the region

While Georgia and Armenia seem to be foraying into the sector, other nations in the region also explore opportunities. Uzbekistan one of the cheapest destinations for mining coins is rushing to ease legislation for blockchain startups. Kazakhstan, which once hoped to create its own state-sponsored cryptocurrency, however, moved to ban both crypto exchanges and mining, but neighboring Kyrgyzstan took the opposite approach. Kyrgyzstan announced plans to legalize and encourage cryptocurrencies in government-backed projects with the goal of increasing efficiency and transparency.