Cryptocurrency miners in Kosovo will need to find an alternative source of energy following the decision by the government to ban cryptocurrency mining as part of the recent energy emergency crisis measures.
Kosovo has become a hotbed for cryptocurrency mining, with tech-savvy entrepreneurs making use of the free electricity in the regions of Leposavic, Mitrovica, Zubin Potok and Zvecan. However, Kosovo’s energy network operator KOSTT announced in November of last year that it would no longer supply consumers from this region with free electricity. The most recent announcement, released as part of several energy emergency crisis measures agreed by the parliament includes the banning of cryptocurrency mining.
Despite being the poorest nation in Europe, the serb-dominated northern regions of Kosovo have not had to pay for electricity following the end of the war in 1999. Since then relations between Serbia, and its former province Kosovo have still been tense, with the serb-majority north refusing to acknowledge the independence of Kosovo.
The ongoing energy crisis has led to the introduction of rolling two-hour blackouts for most consumers, as well as an announcement by the KOSTT that they would be ceasing the supply of free power to the northern regions.
Kosovo’s free electricity in the north made cryptocurrency mining an attractive proposal to miners, and even in other regions where electricity is not free, the cost is a fraction of the cost of other neighbouring countries.
However, the decision by the government to cease government subsidies to the northern regions of Kosovo, alongside the decision to ban cryptocurrency mining entirely, will make it difficult to turn a profit in a country with significant energy shortages. The head of KOSTT’s board, Jeton Mehmeti noted:
“If we continue in December, the company will have a loss of around 10 million euros. If we continue with paying the bills for the next year, then we cannot implement our plans. We will have difficulties operating next year if we do not get the money back,”
An MP from the ruling Vetevendosje party commented that it will be few weeks before the northern municipalities begin to pay their energy bill for the first time since 1999:
“Vetevendosje has not agreed to pay for electricity bills in the north. We have given the government a six-month deadline and it is important that the government deals with this issue intensively,”
The energy emergency measures may appear drastic, but are based on years of energy issues in Kosovo, manifesting in blackouts across the country and exacerbated by a severe lack of regulation and a depressed economy. While crypto miners have been able to make use of the low-cost energy, the excessive electricity consumption of crypto mining is not compatible with a nation that has significant power outages, and a portion of the country that has only just begun to pay for their electricity.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.