Panic as Kosovo pulls the plug on its energy-guzzling bitcoin miners | Cryptocurrencies
For Bitcoin enthusiasts in Kosovo with a breezy risk attitude, it's been a good week to strike a deal for computer equipment that can create, or "mine," the cryptocurrency.
From Facebook to Telegram, recent posts in the region's online crypto groups have been dominated by dismayed Kosovars trying to sell their mining equipment - often at bargain prices.
"There's a lot of panic and they're selling it or trying to move it to neighboring countries," said CryptoKapo, a crypto investor and administrator of some of the region's largest online crypto communities.
The frenzied social media action follows the Kosovar government's year-end announcement of an immediate, albeit temporary, ban on all crypto-mining activity as part of emergency measures to alleviate a crippling energy crisis.
Bitcoin and other cryptocurrencies are created, or "mined," by high-performance computers that compete to solve complex mathematical puzzles in an extremely energy-intensive process that rewards people based on the amount of computing power they provide.
The incentive to get into the prospecting game in Kosovo, one of the poorest countries in Europe, is obvious. The cryptocurrency is currently trading at more than £31,500 per bitcoin, while Kosovo has the cheapest energy prices in Europe, in part because more than 90% of domestic energy production comes from burning the country's rich reserves of lignite, a inferior coal, originates. and fuel bills subsidized by the government.
The largest crypto mining is believed to be taking place in the north of the country, where the majority Serbian population refuses to recognize Kosovo as an independent state and consequently has not paid for electricity for more than two decades.
There is serious money to be made - and in an era of ready energy supply it has been made. It is believed that the number of people mining cryptocurrencies in Kosovo has skyrocketed in recent years. Groups like Albanian Crypto Amateurs on Facebook and Crypto Eagles on Telegram have exploded with thousands of new members, although it's unclear how many are mining cryptocurrencies, or to what extent.
But the good times seem to be over – at least for now – and developments in Kosovo highlight one of the big questions about the future of Bitcoin and other digital currencies.
The University of Cambridge's latest Bitcoin Electricity Consumption Index calculation suggests that global bitcoin mining consumes 125.96 terawatt hours of electricity per year, surpassing Norway (122.2 TWh), Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates is Emirates (113.20 TWh).
A protest against power cuts in Pristina. The cuts were introduced due to an increase in consumption, low domestic production and high import prices. Photo: Valdrin Xhemaj/EPAMeanwhile, Kosovars spent the last days of 2021 in darkness as national and international factors conspired to cause energy shortages and rolling blackouts across the country. At the height of the recent crisis, an unforeseen shutdown of one of its two aging power plants meant that Kosovo imported about 40% of its energy to international markets - where prices have skyrocketed - and forced the government to provide an emergency subsidy to help to support the fulfillment of the costs.
The Economy Minister of Kosovo, Dr. Artane Rizvanolli said the ban was a "no-brainer".
"We have allocated 20 million euros to subsidize energy, which will probably not be enough, and this is taxpayers' money that will subsidize electricity consumption," she said. "On the other hand, we have crypto mining, which is a very energy intensive activity and is not regulated."
Kosovo is not alone. Last September, the 10 most powerful regulators in China vowed to kill what was then the world's largest cryptocurrency mining industry.
In Iceland, the country's national utility, Landsvirkjun, has announced it will turn away potential cryptocurrency miners as the country suffers from power shortages. Last week, a powerful committee in the US Congress announced it would convene a hearing on the issue. US cryptocurrency miners are believed to be the largest energy consumers, followed by Kazakhstan and the Russian Federation.
"It is time to understand and address the tremendous energy and environmental impact it is having on our communities and our planet," said committee chair Frank Pallone and Diana DeGette, who chairs the oversight panel.
Alex de Vries, a Paris-based economist, said his initial estimates in a paper due to be published later this year suggest that only a quarter of the energy consumed by miners is renewable: "The question really is: What do you get in return? ?”
Jason Deane, chief bitcoin analyst at Quantum Economics, said he believes there are a variety of benefits, including offering instant, virtually free financial transactions conducted without the use of a third party, with the peace of mind that there is a will be processed immediately. and that the current teething problems must be put into perspective.
Since the Kosovan authorities made the decision, police and customs officials have been conducting regular raids and confiscating hundreds of pieces of hardware.
While a 60-day energy emergency remains in place, the prospect of impending regulations and rising energy bill prices leave the future far from certain.
"There are many people who have invested in crypto mining equipment and it's not a small investment," CryptoKapo said. "People have even taken out loans to invest and the impact on their lives is very bad now."
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