Abkhazia Posts Videos of Illegal Bitcoin Mines That Are Causing Power Blackouts

The tiny, disputed Black Sea territory has hundreds of illegal Bitcoin mining facilities hidden in basements, villages, and shipping containers.
March 12, 2021, 4:42pm
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Image: Abkhazia M

Officials in the tiny, disputed, Black Sea territory of Abkhazia are determined to show their crackdown on rampant mom-and-pop Bitcoin mining operations is serious business. And they’re posting videos of the cops busting DIY Bitcoin mining farms to prove just that. 

Bitcoin mining has become a big business for the impoverished area. But the digital farms are consuming so much power, they’ve been blamed for rolling blackouts. And now, like the vice squad busting up small-time bootleggers during prohibition, the authorities are moving in.

In a region estimated to have more than 1 crypto-mining facility for every 400 residents by its own Economy Ministry, this is no small feat.  

Abkhazia’s  Ministry of Internal Affairs announced in two YouTube videos this week that it has raided a series of Bitcoin mining operations that were illegally connected to the power grid. In one of the videos, a narrator announces that officials there had “identified a large cryptocurrency mining facility in a village” and several that were illegally connected to the power grid. In total, the government of Abkhazia says they have taken down eight mining operations in recent weeks.

Footage of the mines shows a now-common scene, with tons of mining rigs outfitted with fans whirring in storage containers, in basements, and other unassuming buildings. Bitcoin mining famously uses a ton of power, and therefore big mining operations try to run in places where power is cheap or where there is otherwise some sort of arbitrage opportunity for miners (for example, Bitcoin mines are often in cold-weather locations where the mining rigs can be more easily and more cheaply cooled).

Bitcoin mining has exploded in Abkhazia in recent years due to its exceptionally cheap power rates, Reuters reported. This led to an initial crackdown followed by legalization by the government in September, which pushed more citizens into the business. Winter saw rolling power blackouts in the country as the government noticed an uptick in power use, according to Reuters, which sent the government on the hunt for Bitcoin mines. 

Bitcoin mining has been controversial in several places because of its power use. Venezuela, for example, reportedly cracked down on Bitcoin mining for siphoning power from the grid, before the government started mining itself. In Plattsburgh, New York, a Bitcoin mining operation in an abandoned dollar store led to a major spike in power costs for local residents. In 2018, the city put a moratorium on Bitcoin mining.

The disputed region of Abkhazia is recognized as a sovereign country only by Russia and a handful of its allies. Pretty much the rest of the world considers it part of Georgia.