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Bitcoin,  Regulation

Abkhazia state-owned power firm bans all crypto mining

The crackdown follows a warning by Russian power firm Rosseti that record bitcoin prices could cause an energy crisis in the breakaway region of Georgia

The “national” power company of the breakaway Georgian region Abkhazia has ordered  an immediate stop to all local cryptocurrency mining activity.

Power firm Chernomorenergo’s general director Mikhail Valerievich Logua, an Abkhaz politician, has signed an order imposing “the immediate shutdown of all operating farms for the extraction of cryptocurrencies” in Abkhazia, according to a Dec. 25 report by Russian industry news outlet Forklog.

Recognized only by Russia, Abkhazia fought a war of secession with Georgia in the ‘90s, declaring independence in 1999, according to the CIA World Factbook.

The Chernomorenergo action follows a recent announcement by Russian power firm Rosseti that the firm fears that record high Bitcoin (BTC) prices may spur a new wave of illegal cryptocurrency mining operations threatening Abkhazia’s energy grid.

The document signed by Logua imposes a stop of all cryptocurrency mining activity by Dec. 29. The order also gives the heads of Chernomorenergo and electricity distributor Energosbyt personal responsibility for “unauthorized technological connection to the power grid of all subscribers for the purpose of mining cryptocurrencies.”

Earlier this month, Forklog also reported that Deputy Prime Minister of Abkhazia Christina Ozgan announced an order for the shutdown of all mining farms in the republic until June 1, 2021.

The reason for the shutdown is that in mid-September, a boom of crypto mining activity in the region caused an energy crisis, according to local news outlet Jam reported.

At the time, a Chernomorenergo representative explained that the total capacity of the mining equipment operating in the republic is at least 40-45 megawatts, which constitutes a very high portion of the region’s total available power production:

“With round-the-clock operation, equipment of such capacity can consume about 400 million kWh during a year, which is the majority of the projected shortage of electricity in Abkhazia. The projected deficit for the remaining months of 2020 may amount to 704 million kWh.”

Raids conducted by local authorities because of all those measures resulted in nearly 7,000 crypto mining hardware units being disconnected from the grid.

The Ministry of Internal Affairs of Abkhazia reported the identification of 19 mining farms in a week and explained that most of the activity was conducted from abandoned houses, uninhabitable premises that have been converted into protected areas, as well as simply in transportable trailers.

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.