At first glance, the tiny Republic of Georgia appears to be an unlikely suspect in Bitcoin (BTC) mining. Despite being a mining underdog, the country has plenty of hydropower and is placed sixth in the World Bank’s ease-of-doing-business rating, ahead of the United Kingdom and Germany.
Georgia, which sits on the Black Sea at the crossroads of Europe and Asia, is home to Bitfury’s industrial mining facilities as well as smaller, single miners that use massive quantities of hydroelectric power.
When it comes to Bitcoin mining, the country is a force to be reckoned with. Georgia’s hash rate is 0.18% according to the Cambridge Bitcoin Electricity Consumption Index, but Arcane Research’s extensive and long-term report shows it is closer to 0.71%.
According to Jaran Mellerud, an analyst at Arcane Research and the report’s author:
“In Georgia, home mining is very popular, especially in areas where energy subsidised. People will continue to set up tiny home mining enterprises. As long as there remain electricity subsidies in certain parts of the country.”
According to the analysis, crypto mining capacity totals at least 125 megawatts, with 62 megawatts coming from large data centres. “The remaining 63 MW should then come from a slew of modest amateur installations strewn across the country in homes, garages, abandoned warehouses, and factories.”
Because “100 MW of Georgia’s 125 MW total crypto mining capacity dedicated to Bitcoin and Georgia’s hardware is as efficient as the network average,” Mellerud calculates that the real estimate for Georgia’s overall hash rate is in the neighbourhood of 0.71%. He went on to say that it’s a lot higher than the 0.18% estimate from CBECI.
The tendency of Bitcoin miners goes to unexplored energy resources. However, low-cost energy, or just cost-effective locales to do business is not new, it is a two-edged sword.
Georgia’s “business friendliness”
Regulators in Kazakhstan, who recently hosted up to 18% of the global hash rate because of cheap electricity and lax rules, are already considering intervening, proposing power price hikes and levies.
Despite Georgia’s “business friendliness,” Mellerud recognises that “increasing electricity prices” may dissuade miners from establishing facilities. He explained:
“I don’t think the Georgian government wants more mining enterprises. Because miners consume about 10% of the country’s electricity, they contribute to the country’s growing electricity deficit.”
Nonetheless, politicians in Georgia may provide crypto miners tax breaks in a new bill. Which would be a benefit for BTC miners. While Mellerud stated that “there is no place for greater capacity for industrial-scale mining.”
Home miners with units under 1 MW, on the other hand, could continue to thrive. Despite requests in Georgia for the people of Svaneti to make a holy oath to Saint George to ban crypto mining, the country as a whole has a “positive attitude toward the new asset class.”
Small-time cryptocurrency aficionados may continue to use Bitcoin mining waste heat to warm their mountain houses. Thanks to Georgia’s abundant “affordable and clean hydroelectric power.”