The former Soviet republic of Georgia, which occupies picturesque mountain valleys and rugged ridges of the Southern Caucasus, has roughly the same population as the state of Connecticut. It is renowned as the birthplace of Joseph Stalin, as well as for being one of the oldest wine regions in the world, its rich and eclectic cuisine, and, more recently, for hosting the world’s third-largest cryptocurrency mining operation.
Additionally, an estimated 5% of the nation’s households are engaged in mining crypto or invested in it. Back in 2016, the Georgian government was the first to create an operational blockchain-powered system for property rights registration, which by mid-2018 had hosted more than 1.3 million electronic documents. State officials are now looking to move all government registries to distributed ledgers.
Sounds like crypto-buff’s dream, doesn’t it? For a small nation, though, the place in the front row of fintech pioneers comes at a cost. A single entity, the US-based blockchain software and hardware provider Bitfury, is responsible for much of Georgia’s current crypto momentum. Cheap electricity and lax regulation were the selling points that attracted the mining giant to the Alazani valley; being able to negotiate tax exemptions and secure favorable loan terms made it stick around. Critics surmise that it took Bitfury striking a backroom deal with some of the most powerful people in the country to win these privileges, and now the arrangement benefits a very narrow circle of stakeholders while threatening the nation’s energy security.
The warm welcome
Bitfury Group was founded in 2011 by a Latvian entrepreneur Valery Vavilov, whose bio on the company’s website mentions his first-hand experience with the “challenges resulting from the collapse of the Soviet Union.” Although the company is incorporated in San Francisco,