Cryptocurrencies rush has embraced the whole world – digital money allows people to invest, pay for goods, services and surely earn. Interest in them is stimulated by an unprecedented rising cost. Today, bitcoin is the first and most popular cryptocurrency, it emerged in 2009 and was widely used as a means of payment already in a year. The cryptocurrencies rush covers more spheres of activity in Georgia. Apart from professional miners, even political parties attach themselves to mining. Furthermore, according to several researches, Georgia is one of the leaders in mining cryptocurrencies.
In accordance with the research “Global cryptocurrency benchmarking study” carried out by the Cambridge Center for Alternative Finance, Georgia has taken the second place in energy consumption for mining cryptocurrencies. This study states that China is in first place (where 111 megawatt of electricity is spent on mining), Georgia takes the second place with 60 megawatt, the USA is on the third place spending 27 megawatt and Canada gets the fourth spot with 18 megawatt.
Currently, there are 2.9-5.8 million of active cryptocurrencies users, most of them live in North America and Europe. The research includes data received from 150 cryptocurrency companies and experts from 38 countries.
Meanwhile, the Central Bank of China assigned the National Internet Finance Association (NIFA) to request legal authorities of the state’s regions to regulate mining volume. The Central bank specifies that restrictions are accepted with the aim to save energy. Moreover, Chinese authorities have already prohibited to carry out an ICO explaining this measure has high financial risks and also terminated activity of several native cryptocurrencies exchanges. That is why Georgia might go out on top in the nearest future.
The oppositional party “Girchi” (translated “buds”) was famous for the uncompromising struggle for marijuana legalization. But the party’s plans have become more radical. Oppositionists decided to start mining their own cryptocurrency, to spend received funds on buying up state assets and handing them out to people.
“For “Girchi” it is the most important project because while running it we undertake two tasks simultaneously: return people’s assets appropriated by the state and neutralize the government’s levers of monetary policy” – noted in the party. Previously, the party’s representatives requested its supporters to help mining. For this purpose, it was suggested to leave the party’s web page open in a separate window so that a special code could begin mining cryptocurrency for the party.
Roman Gotsiridze, deputy of the Georgian parliament, claimed that powerful servers for mining are located mainly in cold countries, as for example Island, Norway and Canada, because their cooling costs are much less. “Then why such high powers turned out to be in hot Tbilisi? Because they are cheap to maintain” – the deputy wrote on his Facebook page. Development of mining in Georgia is contributed to almost free land, cheap electric power, low-cost labor and practically zero taxes. Gotsiridze emphasizes that in the future other privileges will be given in case of necessity.
The current legislation does not provide for regulation of issues related to circulation and exchange of cryptocurrencies. Nowadays mining is not considered as a business activity and that is why it is not taxed. Deputy of the Georgian Parliament Gela Samkharauli said: “In Georgia cryptocurrencies have become popular lately and we have no regulators at the moment. I do not have any information if such regulators are planned to be implemented in future.”
Founder of the first Georgian cryptocurrency Vakhtang Gogokhiya tells that in Georgia cryptocurrency is not a means of payment at the present moment and is not regulated by the National bank exactly because of this fact. “Paying in bitcoins is the same as bartering. For example – as if you buy some product for gold,” he said.
Roman thinks that major miners must be taxed. He noted: “This sphere could be regulated with an adequate cost of electric power. But our citizens are so poor that such price would always be on the verge of cost”.
Meanwhile, the National bank of Georgia warns about risks associated with using cryptocurrencies which have become more popular throughout the world. “Virtual currency is not a legal means of payment in Georgia. Its circulation is not governed by the law and by the National bank accordingly,” according to a report.
Cryptocurrency trades are executed with the help of exchange services and digital wallets opened in different countries and their legal status is not confirmed in some cases. Based on this, people who use such platforms for transactions can face financial and legal risks. At the same time, they can be a potential target for cyberattacks. Cryptocurrencies anonymity makes them attractive for illegal activity including money laundering. The national bank of Georgia encourages citizens to proceed cautiously while using cryptocurrencies and to take the above mentioned circumstances into consideration.
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Gold rush: why mining in Georgia is so profitable?