Negotiations are ongoing between the government of Abkhazia and Russia for solving a problem that resulted in a ban imposed on crypto mining. The republic is partially recognized in the South Caucasus and plans to legalize the crypto mining industry due to which it has reached out to its northern neighbor for sourcing efficient power supplies. Based in northwestern Georgia, the autonomous Republic of Abkhazia is negotiating with the energy-rich Russian Federation to supply electricity for satisfying its needs. These talks also cover the energy-hungry needs of those that belong to the crypto mining sector.
In 2018, a temporary mining ban had been introduced, yet the country still ended up on the brink of an energy crisis in the previous year allegedly due to this activity. This forced the regulators to extend the ban till March 2022. Criminal liability and fines were also introduced for illegally using electrical power for the purpose of minting cryptocurrencies and various crypto mining businesses were shut down. Now, the officials in Sokhumi are trying to provide crypto miners with the conditions needed for operating legally. This was disclosed by the Deputy Prime Minister and the Minister of Economy of Abkhazia, Christina Ozgan this week in a press conference.
She said that the authorities were planning on organizing the supply of electricity from their neighbor and setting up facilities where miners will be able to install their equipment. The republic has already had a visit from Russian representatives for clarifying the technical aspect of the deal and a draft agreement has also been received by the Abkhazia government. She emphasized that the crypto mining crackdown had been prompted by the electricity shortages in the country. Chernomorenergo, the local power distribution company, came up with some estimates. These reveal that in 2020, the total capacity of the mining equipment being used in the republic was between 40 and 45 megawatts.
When the hardware is fully loaded, it can burn approximately 400 million kilowatt-hours of electricity in a year and this makes up a huge percentage of the deficit in the country. It was also announced by Christina Ozgan that before the imports of mining equipment were brought to a halt, more than 66,000 mining devices had already been delivered in the country. She also disclosed that authorities were going to disclose a new electricity tariff for those mining cryptocurrencies and encourage them to pay their bills.
The aim of Abkhazia is to legally connect all crypto mining farms in the country to the electrical grid. It is also part of their plans to regulate the interaction that occurs between the state-run power utility and the mining entities that exist. Whether they will be able to do so or not depends on how their negotiations with Russia turn out. If they are not fruitful, the problem with electricity supplies will continue to exist and the crackdown against crypto mining will continue, which doesn’t bode well for the country’s crypto miners.