The country has emerged as a leader in large-scale cryptocurrency mining, thereby exposing its social and environmental effects.17 May 2018
The Caucasus country was an early adopter of blockchain, the distributed data technology that underlies bitcoin and other cryptocurrencies.
Georgia’s cheap hydropower and low regulation make it highly attractive for cryptocurrency miners, U.S. public broadcaster NPR writes.
Bitfury is the dominant player in the field. Cryptocurrency mining needs huge amounts of power, and according to the company, its data center’s monthly electricity use is equal to the average consumption of 120,000 Georgian households, or 10 percent of the population.
The low price it pays for all that power has some Georgians grumbling that the country got a bad deal. Others worry about ties between Bitfury and the billionaire Bidzina Ivanishvili, a former prime minister and still a potent force in the ruling Georgian Dream party.
An investment fund linked to Ivanishvili lent money to Bitfury, which counts a number of Georgians and East Europeans in its upper management. The company’s lawyer in Georgia said the loan was repaid, according to NPR.
Bitfury rejected accusations by opposition politicians that Ivanishvili is a co-owner of the company, Georgia Today reports.
The country’s loosely-moored political infrastructure can be an advantage for “disruptive” technologies like blockchain.
“Blockchain advantages countries like Georgia because they don’t have well-entrenched political systems,” said Sean Mulcahey of Spotcoin, a Tbilisi-based cryptocurrency startup.
Mulcahey said Georgian officials are “low regulation, which gives us more flexibility.”