Home / Economy / How Can Georgian Economy Benefit from Bitcoin?

How Can Georgian Economy Benefit from Bitcoin?

For the first time in history, the price of Bitcoin broke its highest record (Figure 1) rising above 2,900 USD during the last week of June, 2017.

One of the reasons why the market unexpectedly became optimistic about Bitcoin could be the fact that in April, the Japanese government formally accepted1 the cryptocurrency as a mean of exchange, which gave it more validity in Asia’s richest economy. Moreover, there has been significant growth of international money transfer services that use Bitcoin in order to move currency from one country to another.  An additional interesting turn of events is the broad acceptance of Bitcoin in the U.S.

GEORGIA’S “MINING” POTENTIAL

Bitcoin is quite familiar to Georgian society. First, it caught mass attention when Bit Fury7 (one of the leading full service blockchain8 service provider technology companies, operating in U.S., Iceland, London, Amsterdam, Georgia and Hong Kong) set up a data exchange center (for mining) in the city of Gori in 2014, with the support of the Georgian Investment Fund.

The low cost of electricity, low taxes, and the sustainable business and investment environment were the most encouraging factors for Bit Fury to enter the Georgian market. Taking into account the benefits provided by the Georgian market, the company decided to build up a second data exchange center in the capital city of Georgia (17 km from the center and close to main airport – located in Gldani).

With 100 MW (megawatt) energy capacity, it is greater than the data center in Iceland (1.2 MW) and the data center in Sweden (10 MW). Moreover, the Free Industrial Zone in Tbilisi (which includes preferential taxes9) was one of the driving factors for Bit Fury to open the second data center. The firm invested 100 million USD in the second project and it is the biggest Bitcoin data center located in Georgia. Recently, in collaboration with Bit Fury, the Georgian government came up with an innovative system of registering land titles via private blockchain.

This activity was the first time the government used the bitcoin blockchain infrastructure and, since Bitcoin is often associated with illegal activities, this was a good opportunity to improve Bitcoin’s reputation around the country. According to the official representative of Bit Fury in Georgia10, the 100 million USD investment will bring modern information technologies into the country, and Georgia itself will be added to the innovative technologies world map.

Taking into account the recent development of cryptocurrency mining in Georgia, one could argue that our country might find a niche in providing technological services in the long run, which in fact might lead to an increase of exported service. At the same time, the Georgian market should maintain a competitive advantage on the global market in order to attract foreign investors.

Source ISET