Cryptocurrency boom in Georgia: reasons and prospects

In 2017, the University of Cambridge Global Cryptocurrency Benchmarking Study conducted a study according to which Georgia was in second place in the world, after China, in terms of the power of devices involved in cryptocurrency mining.

Shota Digmelashvili, executive editor of Forbes-Georgia, sees three main reasons for the crypto boom in Georgia: the relatively low cost of electricity, high unemployment and liberal legislation in the field of entrepreneurship.

It is also worth noting the high interest of the Georgian government, which began to introduce blockchain technology in government services.

Two years ago, the Georgian authorities gave the green light to a pilot project that involves storing data from the Georgian public registry using the technology blockchain. The Ministry of Justice also plans to transfer business registration to the blockchain and apply the practice of working with smart contracts.

Interest in digital currencies in Georgia has grown to such proportions that at the end of last year the National Bank addressed the population and noted that cryptocurrency is not regulated and is not a means of payment in the country. In case of problems, there is no legislative body that can help in case of problems that arise.

The leader in the industrial production of digital currencies in Georgia is the company BitFury, which built two data centers in a short period of time. 

The first of them was built in 2014 in Gori, for which the company received a loan of $10 million from the Georgian Co-Investment Fund. After this, BitFury was provided with another series of benefits from the government, and for the construction of the company’s second data center in Tbilisi, the authorities allocated 18 hectares of land for a symbolic sum of 1 lari.

A few months later, the Georgian authorities even declared this territory a free industrial zone. Companies operating in this territory do not pay VAT, property and profit taxes, and also have the opportunity to purchase electricity 18% cheaper.

Such privileges from the authorities have made BitFury a cause for controversy among many Georgian officials, who believe that the benefits provided to the company are unprofitable for the population of the country. 

So, officials attribute the increase in the cost of electricity for the population to the fact that BitFury was provided with undeserved benefits and this placed a burden on the wallets of ordinary citizens. 

BitFury refutes these arguments.. Representatives of the company stated that no one is creating greenhouse conditions for the company in Georgia, and it has long since returned the loan to the Ivanishvili Foundation. Moreover, all the benefits that were provided to BitFury do not contradict Georgian legislation in any way.

Also, Efrem Urumashvili, a representative of BitFury-Georgia, stated that the territory in Tbilisi was “absolutely empty” and was not used in any way before the company’s activities. Which, according to the businessman, created a trend, making Georgia famous throughout the world and attracting a number of investments from other countries.

However, it recently became known that BitFury announced that it was selling the Tbilisi data center to Chong Sing Holding, which is registered in Hong Kong.  The reason, amount and details of the transaction have not yet been disclosed.