Wine, Mountains, and Mining Rigs: Georgia as a Crypto Powerhouse

An estimated 5% of the nation's households are engaged in mining crypto or invested in it.

A single entity, the US-based blockchain software and hardware provider Bitfury, is responsible for much of Georgia's current crypto momentum.

Vavilov first arrived in Georgia to talk business in 2013; in July 2014, Bitfury's first 20 megawatt data center emerged in the eastern Georgian city of Gori.

In December of the following year, a major expansion nearly tripled the company's mining capacity in the country, as Bitfury deployed its 16 nm ASIC chips at a new facility in the area called Gldani, within the capital Tbilisi city limits.

In February 2018, Bitfury announced that it was selling the Gldani data center to Chong Sing Holdings, a Hong-Kong based fintech company, citing the need to continue its "Successful expansion in the Asian market of both hardware and software solutions." However, in just a few months the facility went back under the original proprietor's control: amid plunging prices and increasing regulatory pressures in China, Chong Sing found itself rushing to hedge the risks and cut down exposure to crypto assets.

Whether it was due to Bitfury raising the profile of the mining enterprise or people being able to figure it out regardless, the ordinary Georgians have had their fair share of the crypto craze.

Hundreds of thousands of rigs joined the race before the market went steeply downhill, driving the share of mining in Georgia's electricity bill to a staggering range between 10 and 15 percent.

Where Bitfury can still reap the fruits of massive economies of scale, cutting-edge technology, and tax exemptions, Bitcoin hunters with rigs in their garages are increasingly likely to find themselves unable to turn any profit.

In late December 2018, Abkhazia, a contested state that UN recognizes as part of Georgia but which is de-facto independent from the government in Tbilisi, instituted a blanket ban on cryptocurrency mining.

It is now incumbent upon the nation's policymakers and industry leaders to make sure that Georgia grows from being a mining hub to a dynamic center of fintech innovation, where a host of smaller firms compete do deliver consumer-oriented technologies and solutions.