Abkhazia Mining Rig Seizure Fails to Stop Mining

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In Brief
  • Abkhazia has seen a significant spike in electricity usage due to crypto mining.

  • Crypto mining is putting pressure on the electricity infrastructure.

  • Government offensives against crypto mining have increased to crackdown on excessive electricity usage.

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Electrical distribution woes cause Abkhazia officials to go on the offensive and shut down power-hungry crypto mining farms and seize mining equipment.

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Abkhazia Electricity Woes Amplified By Crypto Mining

In an effort to improve income, many individuals in the self-governing territory of Abkhazia have turned to crypto mining to mint new coins. However, the increase in the use of mining rigs has put pressure on the power grid. Cryptocurrency mining rigs can cause an increase in power consumption of 60-90MW, partially contributing to the total annual consumption of two billion kWh per year, which is 10 to 15% more than what should be consumed, according to Levan Melbonia, chairman of the board of directors at the Inguri power plant, located on the border between Georgia and Abkhazia. Both Georgia and Abkhazia share the power generated by the Inguri hydro-electric power plant in a 60%-40% split, following an informal 1997 agreement.

The price of electricity has been low in Abkhazia for many years, with 0.4 Rubles per 1 kWh the most recent publicized tariff for households, leading to an influx of foreign miners into the region, especially from nearby Russia. The region of Abkhazia does not pay for generation, only for distribution, according to the chairman of the board of directors at the plant.

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However, the distribution infrastructure in Abkhazia has seen better days, and much of the electricity doesn’t reach consumers. In addition, the hydroelectric plant was recently shut down for repairs, receiving electricity from mainland Russia via a 220kW and a 500kW line, resulting in blackouts.

Police offensive against crypto mining

Despite police raids in an attempt to crack down on the crypto mining, where 6000 mining rigs have been seized, and mining farms shut down, an estimated 30000 rigs still remain. Many people still have mining rigs in their homes, and the recent government offensives have not deterred the majority of miners from engaging in what is now criminal activity. Some miners connect to the grid illegally, precluding them from any kind of legal recourse.

Much work remains to make crypto mining viable

According to Akhra Gagulia, head of the Gudauta department of the region’s power utility Chernomorenergo, raids and cooperation with law enforcement officials will continue, but much work remains in enforcing the government offensive. The government is looking into procuring power from the Russian Federation, which will enable it to allow mining farms in the region, which are legally connected to the power grid.

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