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CHRISTINA OZGAN: LACK OF LEGAL STANDARDS REGULATING THE ACTIVITIES OF CRYPTOCURRENCY PRODUCERS LEAD TO UNCONTROLLED ELECTRICITY CONSUMPTION

Friday, 20 November 2020 16:27 518

Sukhum. November 18, 2020. Apsnypress. “Cryptocurrency mining has begun to develop in a chaotic manner in the republic since 2016. The lack of legal norms regulating this type of activity has led to uncontrolled consumption of electricity, provoked a significant increase in the load on the power system, the actual state of which is at the limit of its capabilities." This was stated by Deputy Prime Minister, Minister of Economy Christina Ozgan, speaking at the parliamentary hearings on the state of the energy industry in Abkhazia.

According to her, the increase in the volume of electricity consumed since 2016 amounted to about 30%. In absolute terms, the net increase amounted to about 420 million kilowatt hours with the volume of productive supply - 1.7 billion kWh.

“In December 2018, a government decision imposed a ban on this type of activity. The restrictive measure introduced in 2018, in fact, did not have an unequivocal prohibitive nature and did not provide for specific actions and measures of responsibility. In fact, the government, by its decision, banned the mining of cryptocurrencies with the wording - "until the conditions of limited resources of the energy system are eliminated." At the same time, no instructions were given to the relevant authorities and the single operator to determine the limit of this limitation. Thus, for three years, due to the absence of a certain limit of limited opportunities, this type of detail has been actively developing in the republic, ” minister said.

Christina Ozgan pointed out that she has sufficient detailed information about what kind of work was carried out by both the Ministry of Economy and “Chermorenergo” to implement the requirements of the Cabinet of Ministers resolution.

“In 2019, the General Prosecutor’s Office sent a submission on the adoption of the necessary measures in relation to illegal activities in the extraction of cryptocurrencies at state facilities. Based on the response of  Cheronmrenergo sent to the Ministry of Economy, there was given detailed information that cryptocurrency mining is carried out at state-owned facilities, and a number of facilities were given appropriate technical conditions. Unfortunately, the authorized body did not give instructions to prevent this illegal activity in state facilities, including those subordinate to the Ministry of Economy, ” said Christina Ozgan.

By banning the activities of cryptocurrency producers, the government did not ban the import of equipment.

“There was a situation in which a rapid and uncontrolled growth of consumers was provoked, against the background of the current ban,” Ozgan emphasized.

According to the Ministry of Economy, the actual volume of electricity consumption by cryptocurrency producers in Abkhazia varies within 100 megawatts. And this despite the fact that the maximum allowable possibility of using the capacities of a single operator is no more than 40 megawatts.

"The government has decided to allow the use of this capacity in order to legalize this type of activity. The actual losses of Chernomorenergo due to the lack of legal norms for collecting payments from this category amounted to about 360 million rubles based on the current tariff ," minister told the deputie.

She also sounded the numbers of debts for consumed electricity: “The total amount of debts of consumers to power engineers for the entire post-war period amounted to more than 1.8 billion. At the same time, 866 million rubles are arrears from 2018 to 2020. A significant part of this amount is accounted for by cryptocurrency mining farms. 92% of debts are from individuals ”.

She also noted that there has developed a situation in which Abkhazia cannot do without the flow of electricity from Russia. At the same time, Abkhazia's debt to Russia for electricity is already 619 million rubles.

“In connection with the current situation in the energy sector, we will apply to parliament in order to work out a set of measures to resolve this issue together with the deputy corps,” summed up her speech, Deputy Prime Minister, Minister of Economy Christina Ozgan.