Used to unleashing electricity, Kosovo’s Bitcoin miners now face tough times after ban

Dragan says he earns up to 2,000 euros ($ 2,270) a month mining cryptocurrency in a predominantly Serbian enclave in northern Kosovo, about five times the average monthly income in one of the most poor in Europe.

What makes it even nicer is the fact that Dragan pays nothing for the electricity, which is used in abundance in such power-hungry operations involving complex computer calculations to verify transactions.

But now Dragan, who didn’t want to use his real name, informs the Balkan service of RFE / RL that it cease its cryptocurrency mining activities.

His move came after authorities in Kosovo announced on January 4 a blanket ban on cryptocurrency mining amid an energy crisis in the southeastern European country of some 1.8 million people. inhabitants. Kosovar police have carried out raids in recent days, confiscating hundreds of high-tech devices used in cryptocurrency mining.

Economy Minister Artane Rizvanolli described the action as an “emergency measure” due to the crisis, although experts questioned whether the government has such a right because Kosovo has no law regulating cryptocurrency mining.

In December 2021, Kosovo announced a 60-day state of emergency to deal with the energy crisis exacerbated by the shutdown of one of the country’s two coal-fired power plants, forcing Pristina to import electricity.

Energy prices have skyrocketed across Europe amid rising demand for natural gas as economies recover from the COVID-19 pandemic and new tensions with Russia, which supplies a third of European gas.

Moscow has rejected European accusations it has cut gas deliveries amid reports it has massed tens of thousands of troops and military equipment on the border with Ukraine, raising fears of another invasion there .

Free electricity

Until recently, Kosovo boasted some of the cheapest electricity tariffs in Europe, making cryptocurrency mining particularly attractive.

It flourished in northern Kosovo, home to a large part of the country’s ethnic Serbian population who not only refuses to recognize Kosovo’s independence, but has not paid for power in decades, making l even cheaper mining.

“Here, we do not pay for electricity, so why not produce [cryptocurrency]”Dragan said bluntly.

Dragan says he has been mining cryptocurrency for four years, using the balcony of his apartment in North Mitrovica to store his equipment.

Mining cryptocurrencies like bitcoin involves connecting computers – usually specialized “mining machines” – to the currency network on the Internet.

The electricity used in mining cryptocurrencies is enormous. Bitcoin uses more electricity each year than Argentina as a whole, a To analyse in 2021 by the University of Cambridge suggested.

“You invest between 3,000 and 4,000 euros and you can easily earn around 300 euros ($ 340) per month,” explains Dragan.

Residents of northern Kosovo have not paid for electricity since 1999, when NATO launched a bombing campaign to end Belgrade’s crackdown on the predominantly Kosovar Albanian community.

In 2008, after years of fruitless negotiations with Belgrade, Pristina unilaterally declared independence, a decision now recognized by more than 110 countries, but not by Serbia, an ally of Russia and, among others, a few EU states. faced with their own separatist demands. .

Amid the stalemate between Belgrade and Pristina, residents of four municipalities in northern Kosovo – Mitrovica Nord, Zubin Potok, Zvecan and Leposavic – do not pay for electricity, and Pristina estimates the annual bill at some 12 million. euros. Unpaid electricity has been a major stumbling block in the EU’s efforts to mediate a reconciliation between Belgrade and Pristina.

Police raids

As of January 12, Kosovo police announced the seizure of nearly 430 bitcoin mining devices.

On January 6, police said they confiscated mining machines “suspected of being used for the production of cryptocurrency” in a raid in the town of South Mitrovica.

On January 8, the Kosovo authorities reported that they had helped the country’s customs agency seize 272 other Antminer bitcoin mining machines in the municipality of Leposavic. One person was arrested during the raid, police said.

A Kosovar police officer inspects cryptocurrency mining equipment during a raid on Leposavic.

A Kosovar police officer inspects cryptocurrency mining equipment during a raid on Leposavic.

Confiscated equipment consumes as much electricity as 500 households per month, or between 60,000 and 120,000 euros, said Finance Minister Hekuran Murati. “We cannot allow the illegal enrichment of some at the expense of taxpayers.”

On the same day, police also reported in a press release that they also had seized 39 other bitcoin mining machines north of Pristina.

Economy Minister Rizvanolli welcomed the convulsions in one post on twitter, claiming that they would save taxpayers “tens of thousands of euros per month”.

Investing in cryptocurrency mining equipment can cost thousands of dollars.  (archive photo)

Investing in cryptocurrency mining equipment can cost thousands of dollars. (archive photo)

Despite the raids, some cryptocurrency miners have said such law enforcement actions will likely be a blunt instrument. A day after the ban was announced but before the first raids, RFE / RL’s Balkan service said cryptocurrency mining devices were still sold new on the internet, including 100 Antminer machines.

“They [cryptocurrency computers and equipment] are like all other household appliances, such as refrigerators, televisions, electric stoves; they all use electricity. It’s impossible to tell them apart, ”Ardian Alaj, co-owner of a cryptocurrency exchange company in Pristina, told RFE / RL. And any seizure of legally purchased equipment could face legal challenges, Alaj said.

“It is still not known what will happen to all the people and companies who bought these devices and imported them under due process, and paid around 29.5% in customs duties and VAT,” said said Alaj.

Granit Kadolli, who says he has been mining cryptocurrency in Kosovo for years, told RFE / RL that the government ban could hit many Kosovars hard in the pocket as many bought the equipment. – some of which can cost up to 7,000 euros – on credit.

“People have taken out loans to buy this equipment,” Kadolli said.

Others wondered if Pristina had the law on its side to institute such a ban.

“There is not enough legal basis for the ban on cryptocurrency mining, as there is no special law regulating this issue,” Arber Jashari, a Kosovo-based legal expert, said Balkan Insight January 7.

Kosovo lawmakers drafted a cryptocurrency bill in October 2021. Although parliament was expected to pass it by the end of 2021, legislation is still pending.

Global repression

Kosovo is not alone in going after cryptocurrency miners.

China also has carried out a crackdown on bitcoin mining over the past year, culminating in a total ban in September.

Pristina’s action came just days after Tehran temporarily banned all cryptocurrency mining in a bid to avoid blackouts, BNN Bloomberg reported.

Cryptocurrencies have also been criticized for their negative impact on the environment, with the aforementioned Cambridge University study found that only 39% of the electricity fueling the bitcoin mining process comes from sources. renewable, 61% of which come from power plants fueled by natural gas. , petroleum and coal.

Back in northern Kosovo, Dragan waits anxiously, wondering if he will be trapped in the crackdown on crypto.

“It wouldn’t be great if [the police] has come, ”he said. “These devices are all worth around 20,000 to 30,000 euros. “

Written by Senior Correspondent Tony Wesolowsky with reporting from Balkan Service Correspondents Taulant Qenaj and Maja Ficovic

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