New crypto mining law developed by the Republic of Abkhazia

The Republic of Abkhazia appears to be changing its mind on crypto mining, according to reports from the Ministry of Economy department press service.

Initially, the government of Abkhazia banned cryptocurrency mining due to the country’s electric power system sustainability in December 2018. Six months later and government has decided to take a different stand. A statement provided by the Ministry of Economy office read:

“The project was approved and sent to the Cabinet of Ministers of the Republic. The bill defines legal, economic, and organizational and technical rules for the implementation of mining activities in the republic cryptocurrency.”

The draft law outlines that an individual or firm will have to register as a legal entity or as an entrepreneur. After the legal identity registration, they are expected to register with the revenue authorities as a taxpayer in order to obtain a license to conduct cryptocurrency mining activities.

It also has provisions that will introduce temporary restrictions on the supply of electricity to cryptocurrency miners. This will happen in the event that there is a power shortage or that there is infrastructure limitations.

Previously, the government was forced to close down fifteen cryptocurrency mining facilities for causing a strain to the power supply. The decision to close down the facilities was made after RUE Chernomorenergo, the state’s electric utility, announced on Facebook:

“As of December 31, 2018, a decree of the Government of the Republic of the Abkhazia, on temporary measures to limit the consumption of electricity by certain categories of subscribers has been implemented. All identified cryptocurrency mining farms are disconnected from the power supply system. A total of 15 facilities were disconnected with a total capacity of 8950 kw/h.”

The energy consumption from the facilities was estimated to be equivalent to the consumption of 1,800 households or that of the Sukhumi district at that time. The electricity supplier also indicated that during closure, business owners showed understanding and participation despite the disruption of their operations.

Raul Khadzhimba, the president of Abkhazia, instructed the General Prosecutor’s Office and the Ministry of Internal Affairs to identify the necessities of mining cryptocurrency in the country. The crypto community in the country is still waiting to get the report from the authorities.