The dark side of Bitcoin mining - The case of Kosovo
Bitcoin mining is one of the most discussed topics right now. It came back to the forefront after Musk's tweets for its environmental footprint. The original tweet was an official communique by Tesla stating that it would stop accepting Bitcoin's for its vehicle purchases.
Which he then backed up with data from cbeci.org showing the annualized electricity consumption in TWh of Bitcoin and how it has sky rocketed in the past year.
The ensuing debate intrigued me and I started digging more about some of the dark sides of Bitcoin mining, and I came across the issue of mining BTC in North Kosovo and how it has impacted the country and local population.
Before we go deep into the rabbit hole let's present some points about Kosovo, for people who don't know much about it.
Kosovo is a partially recognized country, in the Western Balkans (South / East Europe) which broke away from Serbia / Yugoslavia in the 90s after a bloody war that cost numerous lives and required the international intervention of NATO. The war in Kosovo, was the epilogue of the wars that led to the break-up of Former Yugoslavia, after those in Slovenia (very brief conflict), Croatia, and Bosnia. Inhabited by a majority of ethnic Albanians, and a minority of Serbs, Kosovo is currently recognized by nearly half of UN member states and most EU countries, while it aspires to join the European Union in the future.
Mining bitcoin in North Kosovo
After the war, the mainly Serb populated north of the country has been living in a parallel social structure, semi-independent from the rest of the country. With Bitcoin mining becoming a profitable business, lots of such rigs and mining centres have started to operate there.
In sparsely populated villages and towns, both small Albanian enclaves, and Serb dominated areas, grifters looking to bend the system and maximize profits have been renting every possible space; attics, garages, abandoned apartments whose owners have moved elsewhere. Whatever you can imagine. The price can go up to 20 EUR / month / mining rig (machine).
Where's the catch though? The catch is that since the war in the late 90s, the North has remained in a semi-breakaway state, not following the official Kosovo government directives while using the resources.
And what is the most necessary resource for cryptomining? Electricity. That's right, people living in that part are connected to the power-grid, but have never paid anything for the electricity they have used for 23 years now, as they do not recognize the official authority of Kosovo's government.
The costs for the northern municipalities, currently in this limbo state, has been tens of millions for the government which are taxed at an extra 3.5% percent to the rest of the population as you cannot cut electricity, a basic utility from the people.
But, if there is profit at play these things are bound to happen, and abandoned houses in forgotten villages, in of the poorest European countries can be rented for 500 to 1000 EUR month without having to pay any costs for electricity and maximize the profits of miners while straining electrical energy distribution inside the country. As there is no solution in sight, at least not until the relations between Serbia and Kosovo have normalized, grifters will benefit, public institutions will fail to deliver, people will suffer the consequences and damage, and Bitcoin mining will remain a questionable and dirty business.
Most analysts estimate that Bitcoin price will increase in the following years, hitting $100,000 to $500,000 (depending on the timeframe and which analyst you read). My bet is, so will these cases of dirty bitcoin mining. If there is profit to be made, it is in our nature to exploit all available resources in order to make it happen.
