Republic of Georgia Emerges as a Global Leader in Cryptocurrency Mining
The former Soviet Republic of Georgia is positioning itself as one of the leading countries in the cryptos space and is now ranked second in the world for cryptocurrency mining after China. This has been the result of the country’s electricity subsidies and fair regulation.
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Despite its obvious economic benefits, cryptocurrency mining has always been scrutinized by would-be investors because of its huge energy requirements. This actually reduces its value case in other jurisdictions.
The tiny nation of Georgia has, however, reportedly remained attractive for mining because of its electricity subsidies with some regions that already have lower rates for electricity like the Alazani Valley attracting a lot more mining activity. The country also relies on cheap hydropower.
All this has brought in some foreign investors, including, most notably, BitFury which reportedly controls most of the mining activity – as much as 15% according to some reports – in the country. This interest has been supported by Georgia through preferential tariffs and a waiver on the payment of value-added tax.
Opportunities in Crypto, or Just Hype and Corruption?
While Georgia’s embrace of cryptocurrency might be viewed as the standard industry hype, a more pertinent issue is how it has come with some controversy. Concerns have been raised about the benefits, if any, that Georgia will get from cryptocurrency mining. Dominance by a foreign company has created the impression that only the foreign investors will get something out of it.
Even though it is reported that there are a growing number of local prospectors who are flocking to parts of Georgia to set up their own rigs, the preferential treatment of a foreign entity like Bitfury that is expected to repatriate profits has been viewed by some as a cause for concern.
There have also been allegations – strongly denied by Bitfury – that the country’s former Prime Minister Bidzina Ivanishvili is linked to an investment fund with an interest in the company.
Bitfury does not look like it will be leaving Georgia any time soon. It has cemented its relationship with Georgia through efforts like partnering with the Georgian National Agency of Public Registry in a blockchain land titling project and even stepping up as a socially responsible corporation that supported flood victims in 2015.
As long as conditions are conducive, the company will stay in Georgia, along with everyone else engaged in cryptocurrency mining in the country.
Do you think that energy subsidies are a good way for governments to increase the adoption of cryptocurrencies or are they just a crutch to investors in this space? Should Georgia remove subsidies for Bitfury? let us know in the comments below!
Image courtesy of Unsplash/Andre Francois, AdobeStock