The Energy Demand of Crypto Mining is Raising Concerns

Crypto mining has been outlawed in Abkhazia, yet it continues to thrive due to the region’s low-cost hydropower.

Abkhazia already faces power shortages, especially in winter when water levels drop. The round-the-clock energy demand of cryptocurrency mining has worsened these outages. Power blackouts have become routine, initially lasting four hours daily in November but stretching to nearly ten hours by mid-December.

Mining digital currencies requires powerful computers to perform countless calculations every second. The more processing power involved, the higher the electricity consumption.

While Abkhazia’s situation is extreme, it reflects a global trend. Cryptocurrency mining is expanding rapidly, driven by its insatiable need for electricity. Miners, both legal and illegal, are seeking out locations with cheap energy, often in areas with abundant renewable resources. However, experts warn this can strain local power supplies, reducing access to clean energy for residents.

A 2023 UN University study found that Bitcoin, the most widely used crypto, consumes more electricity than Pakistan, a nation with over 230 million people. Moreover, the International Energy Agency predicts that global crypto electricity usage will rise by 40 percent by 2026. In the United States, electricity demand is expected to increase by approximately 16 percent by 2029, partly due to the expansion of cryptocurrency mining and AI-driven data centers.

Some American crypto companies are turning to renewable energy. Florida-based MARA Holdings (NASDAQ: MARA) acquired a wind farm in Texas in December to support Bitcoin mining. It also plans to shift half its operations outside the U.S. by 2028, including in Paraguay, where mining relies on hydropower. MARA claims this benefits both the environment and the economy, ensuring stable electricity access.

However, concerns persist. Paraguay’s state energy company reports that nearly 28% of its electricity is lost each year, partly due to illegal crypto operations. Many low-income households still rely on firewood for heating.

Ethiopia has also attracted crypto miners, with its energy grid powered almost entirely by hydropower. Singapore-based BitFuFu, operating in the U.S., announced an investment in an Ethiopian Bitcoin facility in October. The company argues that this will lower its costs and boost Ethiopia’s economy.

Yet, skeptics question whether Ethiopia can support the industry. Nearly half the population lacks reliable electricity, and businesses struggle to secure enough power.

Anger over the impact of crypto mining is growing in Abkhazia. In December, activists in Adzyubzha reportedly set mining equipment on fire.

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