In the finish of August, an electronic platform known as ECOS Free Economic Zone delivered great news from the country that rarely sparks around the global crypto map — Armenia. ECOS reported adding 60 megawatts (MW) of ability to its power plant-based facility, operating since 2018.
Situated at among the hydroelectric plants around the Hrazdan river, the mining facility will get its electricity supply from our prime-current grid and uses the site’s infrastructure to power containers. The platform’s representatives noted that ECOS could expand for an additional 200MW of unpolluted electricity. To compare, the Berlin Geothermal power plant in El Salvador gives away 1.5MW from the 102MW it creates to crypto miners, as the Greenidge Generation close to the shore of Seneca Lake within the Condition of recent You are able to must have created about 44MW.
Because of the questionable developments with crypto mining regulation within the Commonwealth of Independent States (CIS) region — countries from the former Ussr — possibly it’s about time to evaluate the commercial potential of the publish-Soviet republic, towering 1,850 meters above ocean level.
Modest publicity
Probably the most certain fact about Armenia regarding crypto is the fact that we don’t get many details in the country. In 2018, the Armenian Blockchain Association became a member of its counterparts from Europe, Kazakhstan, Russia, China and Columbia in filing a joint suit against tech goliaths for example Google, Facebook for banning crypto-related advertising. The lawsuit’s further future is unclear, although the limitations on crypto ads happen to be uplifted a minimum of to some degree recently.
Exactly the same year, Pm Nikol Pashinyan along with other top officials apparently attended the outlet ceremony of a brand new mining farm touting itself among the world’s largest. By local media estimates, around $50 million have been committed to the development of the farm with 3,000 Bitcoin (BTC) and Ether (ETH) mining machines along with a planned capacity of 120,000 later on. The farm is really a partnership by major Armenian conglomerate Multi Group, founded by businessman and politician Gagik Tsarukyan and questionable worldwide mining firm Omnia Tech. No updates concerning the work from the farm have hit the press radar because the very opening press announcements.
Possibly the most crucial and openly visible development in the country of three million was the failure of efforts to create a shared stance regarding cryptocurrency rules through the Eurasian Economic Union (EAEU). In 2021, a higher official from EAEU says member states didn’t support a current initiative for any uniform cryptocurrency regulatory framework inside the union. While no insights on which exact people sabotaged a task can be found, the failure itself have a lengthy-lasting impact overall region, because the EAEU includes not just Armenia and Belarus but additionally such mining heavyweights as Russia and Kazakhstan.
Large ambitions
While there aren’t any traces from the existing legislative framework on crypto in the united states (with no prohibition too), Armenia walked on its regulatory path in 2017 by developing a committee on blockchain technologies.
In 2018, the neighborhood Secretary of state for Finance launched a functional group known as JAF Crypto Market Intelligence Unit (JAF CMIU), whose task ended up being to study possible regulatory scenarios. That very same year, a unique Free Economic Zone (ECOS) started through the government decree to assist attract and develop blockchain and crypto startups.
The possibility residents from the 2.2-hectares ECOS are granted the financial advantages of zero value-added tax (VAT), the lack of import and export responsibilities with no tax burden on property and property. Because the official page goes, the ECOS also provides multifunctional workspaces, a development and research center, acceleration programs and also the infrastructure made up of an electrical plant, data center and mining farm with Bitmain equipment. The only real tax that the zone residents are subject is payments of tax for workers.
The mining capacities from the free economic zone are guaranteed through the electricity in the Hrazdan Thermal Power Plant, located in a mountainous region of Armenia having a low average annual temperature, which makes it beneficial for cutting cooling costs.
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Talking with Cointelegraph, ECOS marketing manager Anna Komashko cites the second fact like a serious advantage, nodding towards the recent trouble for miners in Texas following a scorching heatwave within the Southern condition. As she specifies, presently 60% from the Armenian facility’s 260,000 users come from the U . s . States and Europe.
A mountain of mining?
Armenia posseses a minimum of two large mining facilities, one of these marketing itself as condition-of-the-art. The country’s government also appears moderately friendly toward crypto, although with no concrete legislation being considered. But is that this enough to think about the country particularly attractive for investments?
Possibly such broad factors because the country’s ascendance in transparent governance ratings, the big consumption of IT specialists who’ve left Russia, and also the natural leaning to draw in our prime-tech and repair companies even without the significant hard industry may also operate in Armenia’s favor.
But, with crypto mining, the decisive importance still is based on the world from the material, i.e., the general energy profile of the nation.
Data from the 2021 study through the DEKIS Research group in the College of Avila ranks Armenia 56th within the global crypto mining potential ranking. The positioning itself isn’t lacking — for instance, with all of its gargantuan ambitions, El Salvador occupies only line number 73. Kazakhstan, which for a while grew to become the best place for Chinese miners, sits at 66th, and Iran ranks 115th.
But more interestingly, by its potential, Armenia outranks neighboring Georgia (83th), that has established itself like a mining hub by 2018 rated second around the world in Bitcoin (BTC) mining profitability.
However, one might question the DEKIS report itself as, based on its data, both mountainous countries possess close to zero quantity of alternative energy (% within the situation of Georgia, .1% in Armenia, more specifically). Talking with Cointelegraph, Arcane Research analyst Jaran Mellerud recited remarkably different figures:
“In Georgia, 75% from the electricity is generated by hydropower, although this number is just 31% in Armenia.”
These figures, Mellerud believes, really make a difference for potential miners who naturally seek cheaper energy. While hydropower has almost zero marginal production cost, gas and nuclear power — which still form a complete most of power in Armenia — are way less convenient for collateral use. In the end, Mellerud can’t think about the country being an especially attractive direction for foreign mining because of local prices:
“The issue is high electricity prices, especially now when gas prices are dealing with the rooftop, along with a significant share of Armenia’s electricity is generated by gas. I had been in Georgia this summer time, as well as there, miners are departing the nation.”
By 2021, the cost per kilowatt hour (KWh) of one’s in Armenia amounted to $.077, that was relatively less than in developed markets (take a good example $.372 in Germany or perhaps $.15 within the U . s . States), but nonetheless greater compared to Kazakhstan ($.041), Uzbekistan ($.028) or Iran ($.005). Using the inflation of worldwide energy prices, the figures may change considerably, however it hardly would result in considerably different outcomes.
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Based on the country’s profile from Worldwide Energy Agency (IEA), Armenia is heavily dependent on Russia when it comes to its consumption, importing around 85% of their gas and every one of its nuclear fuel after that. Overall, it depends on fuel imports in one country to create nearly 70% of their electricity, “raising concerns concerning the diversity of supply.”
Like a report from OCCRP suggests, the rising quantity of small hydroelectric plants provided only 9% of consumed energy by 2013, with ecological scientists raising concerns about these plants endangering local rivers’ water balance.
