Due to electricity concerns, the government of the Republic of Abkhazia has decided to cut off the power to 15 crypto mining facilities. The announcement was made on 31 December 2018 by the state electric utility Chernomorenergo RUE on Facebook.
According to the announcement, 15 facilities with a power capacity of 8,950 kilowatt-hours (kWh) had their power cut, which was approximately similar to the power consumed by 1,800 households. Considering the fact that Abkhazia is a country with a population of around 240,000, the power consumed by the mining farms is very significant.
Chernomorenergo announced that the power cut was a part of a series of actions aimed to limit the electricity consumed by “certain categories of subscribers”. It was emphasized that the owners of the facilities fully understood the reason behind the cut off and were willing to cooperate.
It is no secret that crypto mining consumes a huge amount of electricity for the miners to gain profit. Although it was reported that revenues gained from mining Bitcoin (BTC) in the first six months of 2018 surpassed that of 2017, the profit gained from the activity was reported to be less. Miners would have to invest in more efficient hardware to profit more, where they usually consume a lot more electricity than conventional electrical appliances.
Global governments have expressed their concerns regarding the electric consumption issue and have actively taken measures to prevent it from worsening. For example, the Norway government stopped subsidizing electricity for facilities that mined BTC. Lars Haltbrekken, the Parliamentary Representative for the SV (Socialist Left Party), stated that the government could not continue encouraging the mining of BTC which consumes a lot of energy, resulting in the generation of an unhealthy amount of greenhouse gases.
It is worth noting that mining is becoming less popular in countries like China. It was reported that majority of Chinese miners have decided to short sell BTC in order to protect themselves from the declining market. A new generation of miners have also started hedging their digital assets as the market continues to be at an all time low.