Victor Ugochukwu · Oct 22, 2020 . 5min read
Russian Province Abkhazia finally legalizes and regulates Crypto Mining
The Government of Abkhazia has now decided to legalize cryptocurrency mining as the prohibition on crypto mining proved to have a reverse effect.
By Komal Joshi · Oct 3, 2020 . 6min read
Following two years of prohibition, cryptocurrency mining will again be legalized in Russia’s province Abkhazia. Earlier, the President of Abkhazia, Aslan Bzhania, designated that the nation will lift its de facto ban on crypto mining. The government was contemplating to introduce a more commendatory regulatory mechanism for digital currency mining in the country, instead of banning them entirely. It seems like the government has finally taken measures to legalize and regulate crypto mining.
As affirmed by the officials, banning crypto mining has already caused the energy sector to fall and even developed cash problems in the nation. The Abkhazia government confirmed that the prohibition proved to be unachievable and decided to approach the issue conversely. Further, instead of abandoning to stop the illegal activity, the government of Abkhazia chose to regulate and lead it.
Crypto mining took off in Abkhazia in 2016. Since then, it has been suffering from a national electricity crisis due to a surge in crypto mining farms. It is the low price of electricity (RUB 0.4 [around 0.5 cents] for kW/h for private persons and RUB 0.8 [about 1 cent] for legal entities) that promoted the conversion of the nation into a flourishing crypto mining business.
In 2018, the number of crypto mining farms increased to a level where it was not feasible to ignore the problem. Abkhazia’s state energy company Chernomorenergo says the grid was full of demand. It might be impractical to offer Abkhazia residents with electricity through the winter period in such conditions.
Following that, the Cabinet of Ministers approved a decree. On interim measures, it states on limitation of electrical energy application by specific categories of customers—this virtually prohibited mining. However, the prohibiting decree had a reverse effect.
The Government of Abkhazia regulates Crypto Mining with few conditions.
The Cabinet of Ministers said the new system would face particular restrictions. The first condition states all unauthorized miners must register as legal entities or individual enterprisers. They should install an electricity meter, record the equipment, and demand for connecting to the grid. The second condition states banning the import of mining equipment for two months. The third condition states that in 30 days, the Ministry of Economy must generate and handover to the Parliament a draft law on managing cryptocurrency mining and terms of licensing.
However, the decree also says that miners’ electricity rate will amount to RUB 1.5 [about 1.9 cents] per kW, which is much higher than the usual electricity price in Abkhazia.
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Komal Joshi · Oct 22, 2020 . 5min read