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Dr Ricardo Giucci, Niklas Dornbusch

Economic relevance of crypto-mining in Georgia

Georgia is one of the leading producers (“miners”) of cryptocurrencies worldwide. Despite this fact, little is known about the relevance of crypto-mining for the Georgian economy. Official statistics fail to properly record the mining activity, which to a large extent takes place in free industrial zones.

  • Georgia
NL 23 | 2018
Financial Markets

Against this background, we conducted our own estimation of the economic relevance. For 2017, we estimate a turnover of USD 311 m. The main costs of miners are processors and electricity. Labour costs are very low, given that only ca. 300 persons are employed in this capital- and energy-intensive sector. We estimate profits of the sector for 2017 at USD 178 m and the contribution to GDP at 1.2%, which is quite sizeable. Policy makers should make efforts to improve the statistical recording of thisindustry. Furthermore, the impact and the implications for the electricity market should be looked at; mining-related electricity consumption amounts to 6% of total consumption. Finally, the fact that the sector doesn’t pay practically any taxes is quite remarkable. Ways to raise taxes from the sector should be explored.

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