Bitcoin May Be Down 82% But Georgia is Still Placing a Big Crypto Mining Bet on the Future of Data
Bitcoin is currently down 82 percent from its peak of $20,000 to $3,600 at the moment. However, Georgia is all in, in the crypto mining despite this crash as thousands of Georgians are selling “old cars — even cows — to buy high-powered computers to mine Bitcoin,” reported by The New York Times.
In its quest to become the digital data leader, Bitfury, an American technology company has been encouraged with a $10 million loan in 2015 and has been sold 45 acres for $1 to set up shop. The government has also been selling energy at half the rates along with creating tax-free zones. Due to using 10 percent of its energy for virtual currency endeavor, the World Bank ranked it one of the most active crypto sites in the world.
However, due to the crash in crypto prices, companies like Bitmain are closing offices and laying off staff. But Georgia is betting its economy on blockchain technology.
“The economy’s digital transformation is our highest priority. We’re supporting this any way we can,” said George Kobulia, the economy minister.
Boosting Crypto Mining to Become Digital Data Leader
In 2003, the govt. struggling with poverty and bureaucracy after the last Soviet-era leader was ousted. The country then began to promote itself as the business-friendly outpost with low taxes.
Then Bitfury opened its door in the country when Bitcoin was around $350. Georgia, as a result, created “free economic zones” where electricity and mining activities weren’t taxed.
Apart from Bitfury, there are an estimated 200,000 people who have secured mining computers in their garages and basements. These small investors are now far more vulnerable with Bitcoin prices down as George Kirvalidze, who had managed to mine 20 Bitcoins said, “At one point it was more profitable than owning a cow. Now it’s not so sure.”
These small crypto miners created mining pools with their friends, but with cutting-edge technology and quasi-state backing in Georgia, “Bitfury is one step ahead of us,” said Kirvalidze. “If we could get cheaper energy prices, too, we could make more. That would increase money circulating in the economy and eventually improve growth.”
Vakhtang Gogokhia, the chief executive of Golden Fleece, a small crypto mining start-up said he has gotten about 10 Bitcoin by consuming one megawatt of energy. While Bitfury says it consumes at least 45 megawatts of energy as it keeps 160 sealed stainless steel tanks filled with a special cooling liquid and power-efficient chips to keep the energy costs down, it is suspected to be more.
However, critics believe taxpayers are being ripped off by subsidizing operations such as Bitfury as they have to foot the fill of these big and well-known companies.
“Georgia is interesting for cryptocurrency miners. But would it be a major source of our economic growth? Maybe not,” said Mr. Kobulia, the economy minister as with Bitcoin being over 80 percent down, the government is not concentrating only on Bitcoin.