Three Abkhazia cryptocurrency mining farms are straining the electricity system of of the unrecognized, breakaway country, which also suffers from rampant unpaid electricity use by Abkhaz consumers. Drawn by cheap prices, applications for 300 additional mining farms have been submitted to the state energy provider, Chernomorenergo, but all have been denied because of lack of capacity.
Abkhazia cryptocurrency, Russian roubles, and funny money
Since its de facto independence from Georgia in 1992, the unrecognized country calling itself the Republic of Abkhazia has has always endured a precarious economic situation.
This was on display at a press conference held by Chernomorenergo’s general director Aslan Basaria at his office on Thursday. The annual budget plans for the utility he set out for the media were expressed totally in Russian roubles, not the local currency known as the “apsar.”
The reason for this was simple: the Abkhazian apsar is a fictional currency in nearly every respect. Officially pegged at 0.10 roubles (currently US 1.7¢), the apsar mostly exists as a collectors item. So far only a handful of commemorative coins have been produced by the Moscow Mint, the largest denomination being 50 apsars (just under US 9¢). There have never been apsar banknotes in circulation.
With no real independent currency to support its economy, no trade with Georgia and fluctuating tariffs and controls with its only real trading partner, Russia, mining cryptocurrecy could be seen as a plausible way to try to prop up the national income.
Chernomorenergo’s boss does not see things this way, however. Speaking of the possible opening of new Abkhazia cryptocurrency mining operations, Basaria said, “No, it is impossible, there is no capacity.”
Electricity is Abkhazia is cheap at just 40 kopeks (US 7¢) per kilowatt hour, but despite the low prices (which amount to less than the average Abkhazian monthly mobile phone bill) Chernomorenergo still struggles to collect from many of its customers. Currently the energy system is owed 281 million rubles ($4.9 million) and of that nearly 90% is owed by private citizens.
“If you want to get high-quality electricity,” explained Basaria, “then pay for it regularly. And do not forget to install meters.”
Meters are a particular problem for Abkhazia, as only 10% of customers have them installed, and there is no capacity in the budget to provide them. “Where can I get money to install these devices?” Basaria lamented.
But despite much of the financial woes facing Chernomorenergo coming from non-payment by individuals, Basaria thinks that cryptocurrency mining provides more of an existential threat to Abkhazia than an opportunity.
“For the Abkhaz energy system, mining and crypto-currencies are a big problem… Two [are] on the territory of Sukhumi Physicotechnical Institute (SFTI) in Aguder and Sinope…In the SFTI…uncontrolled consumption of electricity is obtained. Yes, they pay for electricity, so what? But at the same time there is a load on our networks, the load on our backbone lines, our substations and transformers. This is a load and a blow to an ordinary person, who in winter wants to get light and warmth.”
If more Abkhazians paid their electric bills then Chernomorenergo might be able to afford ore electric meters, which would in turn boost efficiency and rate collection. This in turn could allow some of the 300 cryptocurrency mining farms wanting to set up in Abkhazia to move in, bringing possible jobs and increased prosperity.