Georgia, a part of the defunct Soviet Union, is becoming a cryptocurrency hub. Often, when the subject of technological advancement is discussed, particular focus is placed on regions like the EU, America, China, Japan, and South Korea. It is rare to consider a country like Georgia in the grand scheme of technology and innovation. In fact, across Central Asia and Eastern Europe, countries are making big impacts in the crypto and blockchain industry.
The Bitfury Connection
Cryptocurrency mining is a big enterprise in Georgia. In fact, the country ranked second behind only China in concerning electricity consumption by bitcoin miners, ahead of countries like the United States and Canada. There are many data centers spread across the country that are dedicated to cryptocurrency mining.
Most of the country’s crypto mining potential is attributed to Bitfury, an American technology company. The company operated a massive crypto mining complex on the outskirts of Tbilisi, the country’s capital. Such is the scale of Bitfury’s mining operation in Georgia that it has caused some controversy over its electricity consumption. Bitfury reportedly consumes an average of 28 million kilowatt-hours of electricity every month for its mining operations. The use of electricity is estimated to be equivalent to the average consumption of 120,000 households in the country. Much of the controversy stems from the fact that despite these figures, the company pays a fraction of the usual electricity tariffs.
Certain opposition politicians believe that Bitfury is being allowed to pay smaller electricity fees due to the alleged involvement of government officials in the company. Bitfury officials have categorically denied the existence of such preferential treatment, saying that the company is the victim of bad press.
Apart from crypto mining, Bitfury has also partnered with the country’s government to develop blockchain technology solutions. In 2017, the company created a blockchain-powered database that could be used to secure public records. The company provided its server space as well as technical expertise for the project. A year earlier, the company also partnered with the government to develop a blockchain-based land registry. The company plans to create other registries for marriage certificates and various personal records in the country.
Mass crypto and blockchain adoption is turning the country into a breeding ground for libertarian ideas. Girchi, a small political faction in the country plans to create a state-owned cryptocurrency if it ever gained power. According to the party leader, Zurab Japaridze, this is part of the party’s goal to privatize the entire country. The party also uses cryptocurrency mining to raise funds for its activities. When visiting the party’s website, the user is given a choice to allow his/her computer to be used for mining Monero. Speaking on the move, Japaridze says that the party has only made a few hundred dollars, but it has helped to establish itself among the younger voting bloc.
Just like in other countries, experts are urging citizens to be cautious when investing in the country’s crypto market. Most of the wealth being generated by the crypto boom in the country is for the benefit of people outside the country. Commenting on the issue, Mikheil Tutberidze, a Professor of Computer Science at Ilia State University in Georgia says that investors have to be wary of the “mass psychology” that causes massive buying during boom periods and panic selling during lean phases. According to the professor, taking out huge loans to invest in the market might end up in disaster.