Why is Georgia Attracting Bitcoin Miners?

Yes, Georgia is a beautiful country, not generally very well known, it is true. However, among crypto enthusiasts and cryptocurrency miners, it is a country that gets a lot of attention.

The small Caucasian nation has attracted many miners thanks to its low cost of electricity. It is not only foreigners who have flocked to Georgia for mining but the population itself, which has become a big fan of cryptocurrencies.

After the collapse of the communist economy, it is no longer even capitalism that makes us dream but rather, monetary libertarianism.

It's interesting to watch how countries without much prior advantage in the games of international relations were able to take a stand with this new technology.

It's actually very intelligent and we can only applaud this way of jumping on (good) opportunities.

Let us recall some surprising facts. The Bitcoin foundation is based in Washington and guess where is the foundation of ethereum (the 2nd crypto after bitcoin)? Well, no, not in Georgia! The Ethereum Foundation is based in Zug, a Swiss canton, known to be a tax haven for cryptocurrencies.

In fact, when it comes to crypto institutions, they are often in northern countries like the USA, Malta or Germany.

But, when it comes to mining, the geography of crypto is changing dramatically. It is rather in the countries of the South that we find large mining farms.

The country with the largest mining farms remains China and comes after it…Georgia, yes!

These electronic currencies are mainly used in northern countries, but also in Nigeria or Southeast Asia. No monetary exchanges without “mining”; this sector is dominated by China and not far behind is Georgia. It is the 2nd bitcoin producing country to put it that way.

This country, with 4 million inhabitants (one million less than in Paris), has carved out a special place for itself in the world of cryptocurrencies.

Mining that costs a lot of electricity

As you probably know, bitcoin mining is an activity that consumes a lot of electricity. See the chart below to see how energy intensive bitcoin mining is.

This is also why many people have put a big stop to cryptocurrency mining.

To quickly summarize what mining is, let's say that the miner is a person who will turn on their computer (a powerful computing device would be more accurate) to solve blockchain equations. These mathematical equations are what allow the blockchain to function correctly (validate operations, record values, etc.). For this work carried out by miners, the blockchain gives rewards in bitcoin. This is called proof of work and is what causes miners to create bitcoins.

Moreover, the new cryptocurrencies do not use the same mining principles as Bitcoin (not on proof of work), but on other supports such as proof of stake or other. The ultimate goal is to reduce the energy consumption of cryptocurrency mining.

What we must therefore understand here is that mining therefore requires equipment ( ASIC for example) very (too) energy intensive. There are then two main factors necessary for mining: a cool climate and a low price of electricity.

The electricity rate in Georgia varies between 3 and 6 euro cents; which is more than half the price in France for example. These ridiculous prices can be explained by the fact that during the Soviet era, hydroelectric production was a priority in the country's development. Today, Georgians benefit from very cheap electricity.

It was in fact with the arrival of a BitFury company that the craze for Georgia took off. The multinational manufactures and designs installations and infrastructure for cryptocurrencies. It does not strictly mine bitcoin but builds the equipment necessary for mining, such as components in particular.

This caused a lot of noise, because it was in 2014, in the middle of the bitcoin mining boom and above all, it was the government itself which encouraged the establishment of the BitFury company.

We don't have an exact figure but according to the World Bank, it is said that between 10 to 15% of Georgia's electricity consumption is intended for cryptocurrency in general.

Georgians want to take their share of the cake

As was said in the introduction to this article, it is not only foreigners who are interested in cryptocurrencies. The Georgians themselves quickly became interested in cryptocurrency. These are for reasons similar to what happens in Egypt with the secret miners in the land of the pharaohs.

With a high unemployment rate and limited work prospects, many Georgians were tempted by the exponential gains that could be had with bitcoin.

Thus, the appearance of numerous Facebook groups has highlighted this craze, which is very strong among the youngest population.

There were also notable or surprising events such as this sugar factory which closed to be transformed into a mining farm. Truth or urban myth, the fact remains that there is always an element of truth in the rumors (?)… Moreover, the company manufacturing sugar will have finally withdrawn…

Like a desire for freedom...

In Georgia, we can see that this craze for cryptocurrencies is also fueled by the fact that Georgians have distrust of the government.

Fed up with corruption, structural unemployment, a very low average salary, etc. All these elements mean that the young generation is diving into cryptocurrencies to also protect themselves against state failings.

Moreover, there are libertarian political parties, created in 2015 Girchi will run a presidential candidate who is very “open” to cryptocurrencies. The idea was to create a national cryptocurrency that would be redistributed to all citizens fairly so that they could buy state-owned land.

The idea is honestly not bad…No? What do you think?