The government of Abkhazia is negotiating with Russia to solve a problem that led to a ban on cryptocurrency mining. The partially recognized republic in the South Caucasus is now planning to legalize the industry and source sufficient power supplies from its energy-rich northern neighbor.
Abkhazia Wants to Create Conditions for Cryptocurrency Mining
The autonomous Republic of Abkhazia in northwestern Georgia is holding talks with the Russian Federation on the supply of electricity to satisfy its needs. Those of the energy-hungry crypto mining sector are also covered by the negotiations, Forklog reported.
Despite a temporary mining ban introduced in 2018, the activity allegedly took the country to the brink of an energy crisis last year, forcing regulators to extend the restrictions to March 2022. Fines and criminal liability were introduced for illegal use of electrical power to mint digital currencies and a number of mining operations were shut down.
Officials in Sokhumi are now trying to create conditions for cryptocurrency miners to operate legally, Abkhazia’s Minister of Economy and Deputy Prime Minister Christina Ozgan revealed at a press conference this week. Quoted by Apsnypress, she said that authorities plan to organize the supply of electricity from Russia and set up facilities where miners can install their equipment.
Russian representatives have already visited the republic to clarify the technical side of the deal and the Abkhaz government has received a draft agreement, Ozgan told reporters. She emphasized that electricity shortages were the main reason for the crypto mining crackdown.
According to estimates by the local power distribution company, Chernomorenergo, the total capacity of the mining equipment operating in the republic was at least 40 to 45 megawatts in 2020. When fully loaded, the hardware can burn around 400 million kilowatt hours of electricity annually, which forms a large portion of the country’s deficit.
Christina Ozgan also announced that more than 66,000 mining devices had been delivered to Abkhazia before the imports of mining equipment were halted. She added that authorities are now going to approve a new electricity tariff for cryptocurrency miners and encourage them to pay their bills.
Abkhazia wants crypto mining farms to be legally connected to the electrical grid. The government also intends to regulate the interaction between mining entities and the state-run power utility.
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