Bitcoin Miners In Georgia Consume More Than 10% Of The Country's Energy Supply

12/11/2019

Bitcoin mining requires an huge amount of electricity resources. To power those mining equipment, miners often tap into conventional power grid. And in Georgia, they are draining the country's energy supply.

According to a report from BBC Sounds podcast, Georgia is the world’s third largest miner of Bitcoin, behind China and Venezuela. And there, miners are “sucking its power grid dry.”

However, it’s not good news for some. David Chapashvili from Green Energy, an environmental pressure group, criticizes the practice for how much electricity Bitcoin mining consumes in Georgia.

According to a report, the environmental group reported that one of BitFury's Bitcoin mining farm on the outskirts of the capital, Tbilisi, is “guzzling” up 4% of the country’s electricity, alone. That’s an equivalent of more than 389 million kilowatt hours.

Chapashvili said that Georgia has no understanding of the total impact cryptocurrency mining in the country's energy consumption.

"There are lots of micro-miners. If you ask a very simple question to the ministry like which sector is consuming [energy] Georgia doesn’t have this kind of analysis. Actually, in reality we don’t know what’s going on or how many consumers are [mining Bitcoin]."
Enguri Dam
Enguri Dam is one of the world's highest concrete arch dam with a height of 271.5 meters. Located north of the town Jvari, it generates hydroelectricity from the Enguri River

Bitcoin mining is often criticized for its massive energy consumption. And Bitcoin network’s total power consumption is often compared to that of entire countries. For this reason, people tend to ask where how much energy does one needs? And where does that energy came from?

And in Georgia, the environmental pressure group estimates that Bitcoin mining is using more than 10% of the country’s energy supplies.

Representatives from BitFury disputed this claim, saying that its energy usage isn’t much if compared to the energy required to mine conventional precious metal mining.

BitFury even said that the presence of cryptocurrency miners in the country is actually the driver for renewable energy.

For example, miners can place their mining centers next to hydroelectric power plants to consume the renewable energy, and puts the power to good use. Meanwhile, the country can also develop the infrastructure required to take advantage of it.

BitFury said that it was using around 28 million kilowatt-hours of electricity per month for its mining operations in the country. This equals to the average consumption of 120,000 Georgian households.

Cryptocurrency mining rigs in the city of Kutaisi, Georgia
Cryptocurrency mining rigs in the city of Kutaisi, Georgia. Many mining rigs mine cryptocurrencies using low-cost electricity generated by water flowing from the nearby Caucasus Mountains. (Credit: Bloomberg / Getty Images)

Fortunately, Georgia isn't entirely dependent on fossil fuels to generate electricity, as it has much of its reserves coming from hydroelectric power.

In fact, most of Georgia is already powered by renewable energy.

Following the collapse of the Soviet Union in 1991, Georgia was plunged into a deep recession. However, after extensive economic reforms, beginning in 1995, Georgia experienced dramatic improvements in its power sector.

According to statistics from the International Energy Agency (IEA), more than 80% of the country’s energy comes from hydroelectric power, with it generating between 75 to 90% of the country's power generation. What this means, the country has more than enough energy surplus, suggesting that Bitcoin mining shouldn't affect much of the country's reserves.

What’s more, according to government sustainable development group Invest In Georgia, the country is only exploiting 25% of its potential when it comes to renewable energy production.

Officials also said that the need for electricity increases every year, and the only way to satisfy the growing need is to continuously build hydroelectric power plants.

Many Bitcoin miners from many parts of the world move to Georgia, as in this eastern edge of Europe, miners can take advantages of its cheap electricity and tax benefits.

With the cryptocurrency craze in Georgia, some expect Georgia to better embrace the technology. But skeptics fear the country has become an outsourcing center for this global cryptocurrency trend. Due to the volatile cryptocurrency market, the trend in Georgia can create jobs but with no lasting gain when things don't go as expected.

The National Bank of Georgia has previously issued a warning, urging people to "exercise caution" about investing in virtual currencies.