For bitcoin enthusiasts in Kosovo With a cheerful attitude to risk, it's been a good week to come to terms on computer equipment that can create, or "mine," cryptocurrency.
From Facebook to Telegram, new posts in the region's online crypto groups were dominated by distraught Kosovars trying to sell their mining equipment, often at knockdown prices.
โThere is a lot of panic and they are selling it or trying to move it to neighboring countries,โ said cryptoKapo, a crypto investor and manager of some of the largest online crypto communities in the region.
The frenzied action on social media follows a year-end announcement by the Kosovo government of an immediate, albeit temporary, ban on all crypto mining activities as part of emergency measures to ease a crippling energy crisis.
Bitcoin and other cryptocurrencies are created or "mined" by high-powered computers that compete to solve complex math puzzles in what is an energy-intensive process that rewards people based on the amount of computing power they provide.
The incentive to get into the mining game in Kosovo, one of the poorest countries in Europe, is obvious. The cryptocurrency is currently trading at over ยฃ31,500 per bitcoin, while Kosovo has the cheapest energy prices in Europe in part because more than 90% of national energy production comes from burning the country's rich reserves of lignite, a low-quality coal, and government-subsidized fuel bills.
The largest-scale crypto mining is believed to take place in the north of the country, where the majority of the Serb population refuses to recognize Kosovo as an independent state and consequently has not paid for electricity for more than two decades. .
There is a lot of money to be made, and at a time of available power supply, it was being made. The number of people mining cryptocurrencies in Kosovo is believed to have skyrocketed in recent years. Groups like Albanian Crypto Amateurs on Facebook and Crypto Eagles on Telegram have exploded with thousands of new members, though it's unclear how many are mining crypto or on what scale.
But the good times seem to be over, at least for now, and the events in Kosovo highlight one of the big questions about the future of bitcoin and similar digital currencies.
The latest calculation from the University of Cambridge bitcoin electricity consumption index suggests that global bitcoin mining consumes 125.96 terawatt hours of electricity per year, which places its consumption above Norway (122.2 TWh), Argentina (121 TWh), the Netherlands (108.8 TWh) and the Emirates United Arab Emirates (113.20 TWh).
Meanwhile, Kosovars spent the final days of 2021 in the dark, as domestic and international factors combined to cause power shortages and blackouts across the country. At the height of the recent crisis, an unplanned closure of one of its two obsolete power plants left Kosovo importing around 40% of its energy from international markets, where prices have soared, and the government has been forced to provide an emergency grant to help meet costs.
Kosovo Economy Minister Dr. Artane Rizvanolli said the ban had been a "no-brainer".
โWe have allocated 20 million euros to subsidize energy, which is probably not going to be enough, and this is taxpayer money that is going to subsidize electricity consumption,โ he said. โOn the other hand, we have crypto mining, which is an activity that consumes a lot of energy and is not regulated.โ
Kosovo is not alone. Last September, China's 10 most powerful regulators vowed to crack down on what was then the world's largest cryptocurrency mining industry.
In Iceland, the country's national power company, Landsvirkjun, has said that keep potential cryptocurrency miners away as the country is experiencing power shortages. Last week, a powerful committee in the united states congress announced that he would convene a hearing on the matter. US cryptocurrency miners are believed to be the largest energy consumers, followed by Kazakhstan and the Russian Federation.
"It's time to understand and address the heavy energy and environmental impacts it's having on our communities and our planet," said committee chair Frank Pallone and Diana DeGette, who heads its oversight panel.
Alex de Vries, a Paris-based economist, said his initial estimates in a paper to be published later this year suggest that only a quarter of the energy used by miners is renewable: "The question really is: what do you get in exchange for that? ?โ
Jason Deane, chief bitcoin analyst at Quantum Economics, said he believed there were a number of advantages, including offering virtually free, instant financial transactions made without the use of a third party, with the certainty of instant settlement. and that current teething problems need to be put into perspective.
Since the decision was made by the Kosovar authorities, police and customs officials have begun regular raids, seizing hundreds of pieces of hardware.
While a 60-day energy state of emergency remains in place, the prospect of upcoming regulation and price increases on energy bills makes the future anything but certain.
โThere are many people who have invested in crypto mining equipment and it is not a small investment,โ said cryptoKapo. "People have even taken out loans to invest and the impact is now very bad on their lives."
