By Claire Gordon • 16 January 2022 • 19:26
Cryptocurrency mining has been banned in Kosovo to try and ease the country’s crippling energy crisis. Although the ban is temporary, it comes in with immediate effect and this is enough to cause many bitcoin enthusiasts to try to sell off their equipment so they can move their operations elsewhere.
From Facebook to Telegram, new posts in the region’s online crypto groups became dominated by dismayed Kosovans attempting to sell off their mining equipment – often at knockdown prices.
CryptoKapo, a crypto investor and administrator of some of the region’s largest online crypto communities spoke to The Guardian and said: “There’s a lot of panic and they’re selling it or trying to move it to neighbouring countries.”
The ban on cryptocurrency mining by the Kosovo government is due to the way these currencies are created. Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers that compete to solve complex mathematical puzzles in what is a highly energy-intensive process that rewards people based on the amount of computing power they provide.
The cryptocurrency currently trades at more than £31,500 a bitcoin, while Kosovo has the cheapest energy prices in Europe due in part to more than 90% of the domestic energy production coming from burning the country’s rich reserves of lignite, a type of low-grade coal, and fuel bills being subsidised by the government.
However, at the end of last year, the country was in darkness as domestic and international factors came together to cause energy shortages and rolling blackouts happened across the state. Kosovo’s minister of economy, Dr Artane Rizvanolli, said the ban had been a “no-brainer”.
“We have allocated €20m for subsidising energy, which is probably not going to be sufficient, and this is taxpayers’ money that is going to subsidise electricity consumption,” she said. “On the other hand, we have crypto mining, which is a highly energy-intensive activity and is not regulated.”
Since the government ruled for the ban against cryptocurrency mining, police and customs officers have begun conducting raids and seizing equipment. The state of emergency has been slated for sixty days to start, but the prospect of tighter regulation and higher energy bills leaves the industry hanging in the balance.
“There are a lot of people who have invested in crypto mining equipment and it’s not a small investment,” cryptoKapo said. “People have even taken out loans to invest and the impact now is very bad on their lives.”
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