Wine, Mountains, and Mining Rigs: Georgia as a Crypto Powerhouse
If crypto mining is similar to oil extraction, should nations worry about the resource curse?
The former Soviet republic of Georgia, which occupies picturesque mountain valleys and rugged ridges of the Southern Caucasus, has roughly the same population as the state of Connecticut. It is renowned as the birthplace of Joseph Stalin, as well as for being one of the oldest wine regions in the world, its rich and eclectic cuisine, and, more recently, for hosting the world’s third-largest cryptocurrency mining operation.
Additionally, an estimated 5% of the nation’s households are engaged in mining crypto or invested in it. Back in 2016, the Georgian government was the first to create an operational blockchain-powered system for property rights registration, which by mid-2018 had hosted more than 1.3 million electronic documents. State officials are now looking to move all government registries to distributed ledgers.
Sounds like crypto-buff’s dream, doesn’t it? For a small nation, though, the place in the front row of fintech pioneers comes at a cost. A single entity, the Netherlands-based blockchain software and hardware provider Bitfury, is responsible for much of Georgia’s current crypto momentum. The company chose to cast anchor in the Alazani Valley for the friendly investment climate and abundance of hydropower on which it heavily relies. However, critics among the Georgian political opposition think that Bitfury was able to negotiate excessively favorable terms with the government, leading to diminished tax revenues and