Kosovo bans cryptocurrency mining activities in the context of European energy crisis

Time:2022-01-05 Source: 2803 views Trending Copy share

In response to the energy crisis triggered by soaring global prices, Kosovo has banned the mining of cryptocurrencies to curb the use of electricity. The government stated that security service agencies will identify and crack down on the source of cryptocurrency mining.

Mining is an energy-intensive task that includes verifying digital transactions to obtain cryptocurrency as a reward.

When the whole of Europe is facing sharp price increases, Kosovo has implemented rotating blackouts in the event of power shortages. Last month, the largest coal-fired power plant in the Balkans in Kosovo’s jurisdiction was shut down due to technical problems, forcing the government to import electricity at high prices.

The 60-day state of emergency announced in December last year gave the government the power to allocate more funds for energy imports and impose stricter restrictions on the use of electricity.

The power outage triggered protests, and the people demanded the resignation of Minister of Economy Artane Rizvanolli.

Due to various reasons, energy prices across Europe are soaring, including insufficient supply from Russia, and as economies recover from the epidemic, demand for natural gas is high.

Geopolitical tensions between Europe and Russia have exacerbated the surge in natural gas prices. One third of Europe's natural gas comes from Russia. Europe accuses Russia of restricting gas supply as the conflict in eastern Ukraine intensifies. Russia denies this.

With the outbreak of the energy crisis, Kosovo has been hit harder than the rest of Europe. Last month, the authorities stated that 40% of the energy consumed by Kosovo came from imports.

On Tuesday, Rizvanolli stated that the government has decided to ban so-called crypto mining in order to mitigate the impact of the global energy crisis.

Mining cryptocurrencies such as Bitcoin requires a computer-usually a specialized "mining machine"-to connect to the currency network on the Internet. By providing the computing power to verify transactions on the network, miner owners can obtain newly generated currency as a reward, which makes it a potentially profitable business.

However, it requires huge computing power, which in turn requires a lot of electricity.

Until recently, Kosovo claimed to be one of the cheapest regions in Europe. In this environment, crypto mining has become popular among young people in Kosovo. This practice is particularly popular in northern Kosovo, where Serbs do not recognize the independence of the country and refuse to pay for electricity.

Due to concerns about the environmental impact of this approach, some countries have begun to crack down on crypto mining. Last year, Iran announced a four-month ban because it consumes more than 2GW of electricity from the grid every day.

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