Cryptocurrencies are booming. But the “digging” of virtual coins is energy -intensive, so it is worthwhile in places with low electricity prices – such as the conflict region of Abkhazia. But the crypto frenzy is expensive.
Donald Trump's election victory gave cryptocurrencies a new thrust. At a cryptocurrency conference in Abu Dhabi, Trump's son Eric announced that the industry was promoted. At the same time, he applied for a new company from the Trump family, the World Liberty Financial cryptocurrency platform. At the beginning of December, Bitcoin rose to $ 100,000 for the first time and has remained at the level since then.
This makes it even more lucrative than before, not only investing in cryptocurrencies, but also producing them. With special hardware and software, everyone can “mine” the virtual coins anywhere and collect a reward. However, the process has so far been very energy -intensive. That is why places with low power fees are particularly attractive.
Crypto mecca on the Black Sea
Such a place is Abkhazia on the Black Sea. The conflict region lies within the borders of Georg, which are recognized under international law. She sees herself as an independent republic, but is only recognized as such by Russia and a few other countries.
Abkhazia nominally has state structures for its approximately 245,000 inhabitants. In fact, a lot works like in a large family in which everyone first thinks of themselves and his closest relatives.
One of the less well organized things is to pull in the already low power fees. According to estimates, around 40 percent of electricity users pay nothing – the best conditions for energy -intensive and lucrative undertakings such as digging cryptocurrencies.
In 2017, Abkhazic leadership even announced plans for creating its own cryptocurrency called “Abbey” Republic Coin “. The isolated and largely dependent region wanted to benefit from international investments on this unregulated virtual financial market – comparable to other gray areas in the orbit of Russia such as transistria or the Russian occupied Donbass in Ukraine.
Electricity thanks to hydropower
Whole mining farms were built in abandoned factory buildings. There seemed to be enough electricity thanks to a gigantic hydropower plant on the Enguri river between Abkhazia and the Georgian core country. Russia also supplied electricity.
The proportion of cryptocurrencies in the world's population, which were given in Abkhazia and other gray areas, cannot be determined in the absence of official statistics. In the international ranking of the University of Cambridge Center for Alternative Finance, the USA, China and its neighbor Kazakhstan – especially china in 2021, have banned mining in his own country in view of the considerable electricity requirements.
Out of control
In Abkhazia, cryptomining was booming in 2018 so strongly that the head of the energy company Chernomorenergo warned of overloading the updated energy network. After a new president, Aslan Bschania, was elected in 2020, the electricity consumption has increased again by a third to three billion kilowatt hours, the Abkhazic journalist Inal Chastig, editor -in -chief of the “Chegemskaja Prawda”, recalls in an interview with tagesschau.de.
Apparently Bschania allowed his people to import mining devices. Despite significant problems with the power supply, mining was then legalized.
After a massive break -in of energy supply, it was restricted, success reports on the confiscation of illegally operated devices are published again and again. But there are mostly simple people who operated three to five devices in their private houses, so Chastig.
Mining farms would rarely be excavated. The devices were returned to a company – the owner was the president's employees. The law enforcement officers would be under the control of the powerful in the security authorities, the government and the presidential administration.
Emergency shutdown due to water lack
The immense power consumption are offset by failures in maintaining and modernizing the energy infrastructure. Suitable blueprints for hydropower plants in the mountainous region have never been implemented, and the power grid did not adapt to the requirements.
The hydropower plant on the Enguri dam has not been fundamentally renovated since the construction in the 1970s. It is operated together by Abkasen and Georgians. The management responsible for the distribution of the energy obtained on the Georgian side announced well before the end of 2024 that Abkhazia had already exhausted its annual share and also did not pay.
This winter there is a very low water level, which is expected to normalize only after the snow melting in the heights of the Caucasus' in spring. On December 11, media in Abkhazia reported an emergency shutdown in view of the critically low water level and the lack of influx of water.
Remandes of Russia
So far, Abkhazia has been able to compensate for such critical phases by buying more subsidized energy from Russia. However, the leadership in Moscow has been calling for commercially available prizes for electricity deliveries since September 1st. She also lowered the additional payments to the Abkhazic household. The Russian food authority banned the import of mandarins to Russia – one of the main export products in Abkhazia. The other source of income – visits to Russian tourists – also dried up in the past few months.
It is the response to the leadership in Moscow for the refusal to enable Russian citizens to buy land and living space. A corresponding law rejected the parliament after protests in July 2024. A Russian-abchasic investment agreement with significant advantages for Russian business people cost President Aslan Bschania. In November he had to give up his post after days of siege by demonstrators. Your fear: a sale to Russia and the loss of the remaining independence.
Emergency care over the holidays
But Abkhazia simply has no more money and the population has to pay expensive: in December there were only electricity for almost five hours during the day. Schools and kindergartens were closed, hospitals use generators to do emergency operation. During the holidays, Russia delivered a limited amount of electricity.
By February 20, there should be no interruptions with normal consumption, the Abkhazic electricity supplier explained Chernomor energy. But there is already blackout times of six hours a day again, according to the journalist Chastig.
Paths from the crisis?
In December, the parliament advised about a stricter ban on cryptomining. On the sidelines of a debate on December 18, there was an armed dispute between two MPs. When a third wanted to finish, he was fatally hit by a ball. The shooter dipped under. It remained unclear whether the dispute was related to the debate.
The political situation remains tense. On February 25, a successor for President Bschania will be elected. One of the candidates, Badra Gunba, is considered one of the largest operators of mining farms and opponents of the mining ban. Another candidate, Adgur Ardzinbar, it was who, as Minister of Economy, wanted to advance the crypto industry in Abkhazia in 2017.
The journalist Chastig is one of those from civil society who appeals to voters and candidates not only thinking about their own short -term advantage within the family, but also all of abhasia. Like many among the frustrated, he demands plans to overcome the now existential energy crisis.