At first glance, the pint-sized Republic of Georgia is an unlikely suspect for Bitcoin (BTC) mining activity. Downtrodden for mining, the country has abundant hydropower while ranking seventh in the world for the World Bank’s ease of doing business index — ahead of the United Kingdom and Germany.
Nestled on the Black Sea at the intersection of Europe and Asia, Georgia is home to Bitfury’s industrial mining operations as well as smaller solo miners that harness massive amounts of hydroelectric power.
The country packs a punch for Bitcoin mining. While the Cambridge Bitcoin Electricity Consumption Index put Georgia hash rate at 0.18%, a retail and long term report by Arcane Research suggests the number is closer to 0.71%.
Jaran Mellerud, analyst at Arcane Research and author of the report, told Cointelegraph:
“Home mining is significant in Georgia, especially in areas where electricity is subsidized. As long as there are electricity subsidies in some parts of the country, people will continue to set up small home-based mining operations.
The report identifies at least 125 megawatts of crypto-mining capacity, of which 62 MW comes from industrial-scale data centers. “The remaining 63 MW would then have to come from numerous small amateur installations scattered across the country in homes, garages, abandoned warehouses and factories.”
Mellerud concludes that the true number for Georgia’s total hash rate is on the order of 0.71% because “100MW of Georgia’s total 125MW crypto mining capacity is dedicated to Bitcoin and the Georgia’s hardware is as efficient as the network’s average. This is a higher multiple than CBECI’s estimate of 0.18%, he added.
However, while the trend of Bitcoin miners turning to untapped energy resources, cheap energy, or just profitable places to do business is nothing new, it is a double-edged sword.
In neighboring Kazakhstan, which recently hosted up to 18% of the global hash rate due to cheap electricity and loose rules, regulators are already planning to intervene by offering electricity price hikes and taxes.
Mellerud is aware that despite Georgia’s “business friendliness”, “rising electricity prices” could deter miners from settling. He told Cointelegraph:
“I don’t believe the Georgian government wants more mining operations in the country, as miners already use almost 10% of the country’s electricity, which contributes to the country’s growing electricity deficit.
Mellerud added that “for industrial-scale mining, I think there is no room for more capacity.”
Instead, home miners with sub-1MW units can continue to thrive. Despite calls for residents of Svaneti, Georgia to take a holy oath to Saint George to stop crypto mining, the country, overall, has a “positive attitude towards the emerging asset class.”
Little crypto enthusiasts can continue to use waste heat from Bitcoin mining to warm their homes in the mountains, using Georgia’s abundance of “cheap and clean hydroelectric power.”