Armenia aims to position itself as a Bitcoin mining hub

A digital platform called ECOS Free Economic Zone provided good news from Armenia, a country that is rarely on the global crypto map. ECOS has reported that it added 60 megawatts (MW), to its power plant-based facility. It has been in operation since 2018.

The mining facility is located at the Hrazdan River’s hydroelectric plant. It receives its electricity supply from the high-voltage grid directly and uses the infrastructure to power containers. Representatives of the platform noted that ECOS could grow to 200MW more clean electricity. Comparatively, the Berlin Geothermal Plant in El Salvador gives away 1.5MW of its 102MW to crypto miners, while New York’s Greenidge Generation should have produced around 44MW.

It is time to evaluate the industrial potential of this post Soviet republic, which stands 1,850m above sea level, in light of recent developments regarding crypto mining regulation in the Commonwealth of Independent States region (CIS).

Modest publicity

One thing is certain about Armenia in regards to crypto: we don’t receive much information from it. The Armenian Blockchain Association joined other countries from China, Russia, South Korea, Kazakhstan, Russia and China in filing a joint lawsuit against tech giants like Google, Twitter, and Facebook. Although the fate of the lawsuit is still unknown, it appears that crypto-related advertising restrictions have been lifted at least in part in recent years.

According to reports, the Prime Minister Nikol Pashinyan attended the opening ceremonies of a new mining facility that claimed it was the largest in the world. Local media estimate that the farm has a capacity of 120,000 and 3,000 Bitcoin (BTC), mining machines. Multi Group, a major Armenian conglomerate founded by Gagik Tsarukyan (politician and businessman) and Omnia Tech (controversial international mining company). The farm is a joint venture. Since the initial press releases, no updates have been made about the farm’s progress.

The most significant and visible event in the country of three millions was the failure to reach a common position regarding cryptocurrency regulations by Eurasian Economic Union. A high-ranking official from the EAEU stated that members did not support an initiative to create a uniform regulatory framework for cryptocurrency within the union in 2021. Although no information is available on how exactly members sabotage a project, it will have a lasting impact on the entire region as the EAEU includes Armenia, Belarus, and mining heavyweights like Russia and Kazakhstan.

Big ambitions

Although there is no trace of the current crypto legislation in Armenia (and no prohibition), Armenia has taken a step back on its regulatory path in 2017 when it formed a committee to examine blockchain technologies.

The local Ministry of Finance established a JAF Crypto Market Intelligence Unit in 2018 (JAF CMIU), which was charged with studying possible regulatory scenarios. A special Free Economic Zone (ECOS), was created by the government in 2018 to attract and support crypto and blockchain startups.

Potential residents of the 2.2-hectare ECOS receive the financial benefits of zero value added tax (VAT), no import or export duties, and no tax burden on real estate and property. According to the official site, the ECOS offers multifunctional workspaces as well as a research and developmental center, acceleration programs, and infrastructure that includes a data center, power plant, and Bitmain equipment. Residents of the zone are only subject to a monthly income tax payment for employees.

The electricity generated by the Hrazdan Thermal Power Plant in Armenia, a region with low average annual temperatures, is used to secure the mining capacity of the free economic area. This plant is located in Armenia’s mountainous region, which makes it ideal for cutting cooling costs.

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Anna Komashko, ECOS marketing manager, spoke to Cointelegraph about the latter fact, referring to recent problems faced by Texas miners after a heatwave. She explains that 60% of Armenia’s 260,000 customers are currently from the United States or Europe.

Mountain of mining?

Armenia has at least two large mining operations, with one of these facilities being marketed as state-of the-art. Although no concrete legislation has been considered, the government of Armenia seems to be moderately supportive of crypto. Is this enough to make the country attractive for investment?

Armenia could benefit from such factors as its rise in transparency ratings and large intake of IT professionals who have left Russia. It also has the natural tendency to attract high-tech and services businesses in the absence or significant hard industry.

Crypto mining is important because it affects the country’s overall energy profile.

The University of Avila’s DEKIS Research group ranked Armenia 56th in the world’s crypto mining potential rankings. This is a good position, considering that El Salvador, with its enormous ambitions, only ranks line number 73. Kazakhstan is 66th and Iran is 115th.

More interestingly, Armenia is ranked higher than its neighbor Georgia (83rd), due to its potential. Armenia has become a mining hub, and was ranked second in the world for Bitcoin (BTC), mining profitability, by 2018.

One might be a little skeptical about the DEKIS report as both mountainous nations have very little renewable energy. According to the data, 0% for Georgia and 0.1% for Armenia. Jaran Mellerud, an Arcane Research analyst, spoke to Cointelegraph and recited astonishingly different numbers:

“In Georgia, 75% is generated from hydropower while it is only 31% for Armenia.”

Mellerud believes these numbers make a significant difference for potential miners looking for cheaper energy. Hydropower is almost free of marginal production costs, but natural gas and nuclear power are more convenient for collateral uses. Mellerud cannot see the country as a particularly attractive destination for foreign mining because of local prices.

“The problem with electricity prices is that natural gas prices are rising rapidly and Armenia has a large amount of electricity generated from natural gas. While I was in Georgia this summer and saw that miners were leaving,

The price per kilowatt-hour (KWh), of Armenian energy was $0.077 by 2021. This was lower than the prices in developed markets, such as $0.372 in Germany, $0.15 in the United States, and $0.372 in Germany. However, it was still much higher than the prices in Kazakhstan ($0.041), Uzbekistan (0.028), or Iran (0.005). The numbers could change dramatically due to the rising cost of energy, but this would not lead to significant changes in outcomes.

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According to the profile of Armenia from International Energy Agency, (IEA), Armenia heavily depends on Russia for its consumption. It imports around 85% of its natural gas from Russia. It relies on imports of fuel from one country to produce almost 70% of its electricity. This raises concerns about the diversity of supply.

OCCRP reports that even small hydroelectric plants are providing only 9% of the energy consumed by 2013. Environmental scientists raised concerns about their potential impact on local water supplies.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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