Abkhazia government blames illegal crypto mining for energy crisis

Abkhazia, a de facto state in the South Caucasus, continues to face an energy crisis. The head of the region’s national energy provider recently blamed increased crypto mining activity for the problems.

According to Jam News, the government’s year-old ban on crypto mining has not been respected nor enforced by the local authorities, with miners continuing to take advantage of the area's low energy costs.

Ruslan Kvarchia, director of operational and technological management of Chernomorenergo, Abkhazia’s official energy company, said:

“Total capacity of the mining equipment operating in the republic is at least 40–45 megawatts. This capacity, subject to round-the-clock consumption throughout the year, is capable of consuming about 400 million kilowatt-hours, 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 kilowatt-hours.”

However, instead of further tightening the screws on cryptocurrency miners, local officials are thinking of a different solution.

Authorities are considering lifting the ban and allowing all crypto mining activities across the region. Allowing miners to operate in the light of day could, according to the government, improve communication between all parties involved: energy providers, miners, and the local authorities. 

The government believes that repealing the ban will allow for closer supervision of mining facilities and therefore, better control over the electricity supply.

Abkhazia has witnessed a surge in crypto mining activities in 2020, despite crypto-related activities being illegal since 2018. Customs have reported that mining hardware worth over $589,000 has crossed the nation’s border over the past six months.