A few days ago, Kosovo banned cryptocurrency mining.
Kosovo, a hub for Bitcoin mining
Since 2018, the Balkan country had become a small mining hub thanks to low electricity costs, but it was precisely because of the impact of mining consumption on the price of electricity that mining was banned.
Starting last year, many miners fleeing China went in search of places where they could continue their activities with reduced costs, and Kosovo was probably one of the destinations chosen by some miners.
Now, however, things are rapidly changing in the country, and many mining farms have had to cease operations.
The local government’s decision to ban mining is based on soaring energy prices and continuous power cuts. Kosovo is also one of the poorest countries in Europe.
According to Bloomberg, many local miners are either looking to move abroad or are selling their equipment.
Soaring energy prices and power blackouts in Kosovo led to a government ban on Bitcoin mining. Now, some miners are selling their equipment or trying to move abroad https://t.co/slnxJJBCLX
— Bloomberg Crypto (@crypto) January 18, 2022
In Kosovo, 429 devices used to mine cryptocurrencies were already confiscated in the first days of January, and the crackdown is likely to continue.
The co-owner of a crypto exchange in Kosovo’s capital (Pristina), Ardian Alaj, told Bloomberg that he had heard of numerous miners trying to sell their equipment in the aftermath of the ban, while only a small number would decide to move to neighbouring countries due to too high transport costs.
Alaj also revealed that mining in Kosovo not only took advantage of a particularly low cost of electricity but was also largely done illegally, i.e. without paying taxes on the proceeds. The fact is that the northern region of Mitrovica is one of four Serb-majority areas in the country where citizens are exempt from paying electricity bills. This had turned the area into a veritable small hub for crypto mining.
Bitcoin hashrate at its peak
It is no coincidence that the biggest problems caused by cryptocurrency mining arise where the price of electricity is the result of political decisions, and not of the continuous and free fluctuations of the market, as political prices are often too low compared to market prices.
In doing so, they attract miners who increase consumption, thus effectively reducing supply for other consumers, and thus increasing prices.
It is worth mentioning that the Bitcoin hashrate in recent days has again risen to an all-time high.