Famous for its wine (and for being where Stalin was born), lately, the valley has been going through a new kind of ferment, because of bitcoin. “You see that building there with the power line outside,” says Bezhani Buzhaidze, “…that’s being turned into a data center for mining cryptocurrencies.”
This tiny former Soviet republic of less than 4 million people has become a virtual printing press for this new money you can’t see. Cryptocurrency mining is the digital equivalent of minting real money, except that anyone with the right hardware and software can do it.
The process consumes huge amounts of electricity, so thanks to its cheap hydropower and low regulation, Georgia is now ranked second in the world for cryptocurrency mining — behind only China.
Part of the attraction, Buzhaidze admits, is “easy money.” Four of his friends also have home-mining rigs. “Everyone is doing it,” he says smiling. But he adds he is also attracted by the libertarian promise of cryptocurrencies. “We won’t need banks anymore,” he says. “It will be good for society.”
Is this crypto boom going to be good or bad for Georgia, a country still struggling with poverty? The National Bank of Georgia, the equivalent of the Federal Reserve, has issued a warning, urging people to “exercise caution” about investing in virtual currencies. “This is high-tech gambling,” says professor Gocha Tutberidze, a former regulatory official with the bank, who now teaches at the European University in Tbilisi. “The profits just go offshore,” he says.
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