Newsletter Issue No. 23 | July – August 2018

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.

Against this background, we conducted our own esti-mation of the economic relevance. For 2017, we esti-mate a turnover of USD 311 m. The main costs of min-ers are processors and electricity. Labour costs are very low, given that only ca. 300 persons are em-ployed 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 sta-tistical recording of this industry. Furthermore, the im-pact and the implications for the electricity market should be looked at; mining-related electricity con-sumption 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.

Download Newsletter 23/2018