Abkhazia is a part of Georgia that is occupied by Russia. Even though it claims to be an independent state, most of the UN countries recognize this region as a part of Georgia. 

Right now, Georgian citizens are not allowed to enter Abkhazia. The region is known for its incredible beauty, buildings. In recent times it has also become a place for crypto mining. In this article, we will have a look at this topic.

The so-called Cabinet of Abkhazia has adopted a resolution on the regulation of cryptocurrency mining in Abkhazia. Also, the decree prohibits the import of equipment for the extraction of cryptocurrencies for two months. 

Background

At the end of 2018, the government of Abkhazia decided to ban cryptocurrency mining activities using the Engurhes system's power system.

The Cabinet's decision to ban mining was taken "due to the need to prioritize the provision of electricity supply to the population of Abkhazia, social and production facilities in the conditions of limited resources of the electricity system."

At the same time, Abkhazia has not banned the import of equipment for the extraction of cryptocurrencies. In the first six months of this year alone, 42 million rubles worth of equipment were brought to Abkhazia, and in 2019 the sum amounted to more than 12 million rubles.

On September 21, 2020, the Cabinet adopted a resolution on measures to regulate the mining of cryptocurrencies. In another resolution "On some regulatory laws in the field of electricity" the Cabinet set a special tariff on electricity for miners.

According to the decision of the Cabinet, for legal entities and individual entrepreneurs engaged in the mining of cryptocurrencies, a tariff of 1 ruble 50 cents per kilowatt-hour (taking into account VAT). In addition, the Cabinet of Ministers decided to impose a limit of 60 calendar days on the import of goods intended for the production of cryptocurrencies into the territory of the republic.

The lawyer believes that the time for mining in the republic has not come yet.

Unfavorable business

According to Andrei Bgazhb, an employee of the CSEI, the activity of miners is associated with certain expenses, the miner can not contain a crypto-farm at any electricity tariff.

The VAT law was first passed in 2015 and has since been repeatedly criticized, and in 2019 it was amended, which was also not perceived by business in a positive way. In July this year, Aslan Bzhania again promised to change the procedure of VAT collection.

Chernomorenergo’s role

Fan power outages in Abkhazia were introduced by the state-owned company of the republic Chernomorenergo since November 15. 

The published order on blackouts states that this measure had to be resorted to because of a shortage of electricity in the amount of 3 million kWh per day. The document also outlines measures that should be applied to "farms" for the extraction of cryptocurrencies.

It is reported that registered owners of mining equipment will be installed the allowable power of electricity consumption, and illegal "farms" will be turned off.

"To disconnect from the power grid of Abkhazia without the possibility of further connection detected electrical installations intended and used for the extraction of cryptocurrencies, ... illegally engaged in cryptocurrency mining activities," the order reads.

It is worth noting that in Abkhazia there is an acute problem with illegal mining farms. It was raised by the country's so-called president, Aslan Bzhania. Until September 2020, this activity was banned in the country, but the number of such farms grew. In September, mining in Abkhazia was legalized, but for this type of activity introduced an increased tariff on electricity.

Conclusion 

What is the resolution of the problem? Considering the fact that Abkhazia is currently occupied and the region is involved in deep crisis regarding cryptocurrencies and mining there is little that can be done about the situation. Almost everything in Abkhazia is designed to benefit from mining but lawlessness is a huge problem for this place.