Photo : REUTERS/Hazir Reka/F
IN FOCUS
By Ashwin Dhanabalan
Kosovo: The ban on Crypto mining
On 04 January, Kosovo's government announced a blanket ban on cryptocurrency mining due to the energy crisis. It launched a crackdown on mining and confiscated high-tech devices. Kosovo, until recently, offered cheap electricity rates that made crypto mining more lucrative.
Apart from the low prices, Kosovo has the world's fifth-largest lignite reserve, which is also the best grade coal for electricity generation. Thus, it provided subsidized fuel bills adding crypto mining to flourish. Ethnic Serbs in Kosovo have been using the available prospects to mint up to EUR 2,000 per month, mining crypto.
Ethnic boundaries and crypto mining
The northern region of Mitrovica has been home to the country's ethnic Serb population, who refuse to recognize Kosovo as an independent country. Kosovo Liberation Army fought former President Slobodan Milošević's Serbian forces to gain independence during the 1998-1999 wars. In 1999 the UNSC passed a resolution stating autonomy for the region of Kosovo, and NATO peacekeeping forces were called to intervene. In February 2008, Kosovo voted to declare independence from Serbia, as the latter called it illegal.
Since 1999, the ethnic Serbs in the enclaves of North Mitrovica, Zubin Potok, Zvecan, and Leposavic have been availing free electricity. Kosovo estimates their refusal to pay electricity at an annual loss of EUR 12 million. Even the EU, states that this unpaid energy is a reason for continuing disagreement and hinders the bloc's efforts to mediate between the two countries. In addition, Crypto miners have used this free electricity to mine cryptocurrency at Kosovo's expense and at the cost of reconciliation with Serbia.
Power outrage and Crypto usage
In December 2021, the government announced a 60-day state of emergency, even though Kosovo's 90 per cent energy demands were met domestically. A combination of reasons caused Kosovo's recent energy shortage: First, It shut down one of its outdated power plants, which led the country to import 40 per cent of its energy from international markets. Second, The government also faced a sudden increase in energy demands due to the cold climatic conditions. Third, Rising gas and power prices in Europe tremendously increased due to COVID-19 and the geopolitical tensions with Russia; Moscow supplies one-third of Europe's gas.
The 60-day state of emergency led to stricter restrictions of power use and highlighted the power usage by crypto miners. Cambridge University's bitcoin electricity consumption index stated that the global crypto mining consumed electricity up to 125.96 terawatt-hours a year, which is greater than the annual consumption of Argentina annually. Concerning the energy issues, Kosovo planned to allocate funds of EUR 20 million to provide subsidized electricity. Minister of Economy commented on the matter, saying, on one hand, the government was trying to subsidize electricity rates. But, on the other hand, crypto mining was going unregulated. Finance Minister said: "We cannot allow the illegal enrichment of some, at the expense of taxpayers."
The crackdown of miners in Kosovo and across the world
On 07 January, authorities launched several raids to crack down on the crypto mining operations. By 12 January, the police announced that they had confiscated 30 bitcoin mining devices. The Finance Minister said: "The confiscated equipment uses as much electricity as 500 homes a month or between EUR 60,000 and 120,000." But, crypto enthusiasts have questioned Pristina's actions as the cryptocurrency bill drafted in October 2021 had not been legislated. They have also emphasized that many people had heavily invested in crypto mining, while others had taken loans and now were directly affected by the restrictions.
Iceland has clearly stated that it no longer welcomes crypto miners because of its power shortages. At the same time, President Biden has assured that the US will convene a hearing regarding the issues of crypto mining. Meanwhile, Iran placed a temporary ban to avoid power shortages caused by crypto mining. In September 2021, China launched a crackdown on crypto miners, resulting in the sale of thousands of cryptocurrency-mining rigs to Southeast Asian crypto enthusiasts.
References:
Daniel Boffey and Jack Butcher, "Panic as Kosovo pulls the plug on its energy-guzzling bitcoin miners," The Guardian, 16 January 2022.
Taulant Qenaj, Maja Ficovic and Tony Wesolowsky, "Used To Free Electricity, Kosovo's Bitcoin Miners Are Now Facing Difficult Times After Ban," Radio Free Europe/Radio Liberty, 12 January 2022.
Alice Taylor, "Kosovo continues crackdown on crypto," Euractiv, 12 January 2022.
"Kosovo bans cryptocurrency mining after blackouts," BBC, 05 December 2022.
IN BRIEF
By Joeana Cera Matthews and Padmashree Anandhan
GERMANY
Green Vault jewel theft trial begins in Germany
On 28 January, the trial of the Six suspects involved in the Green Vault jewel theft began in Germany. The prosecutors have accused the men who carried out the heist at Dresden’s Museum worth EUR 113.8 million. According to the police report, the heist was done by setting fire to the power distribution box and using the darkness the robbers had taken away the jewels. Till now the stolen jewellery remains to be found and the director of the museum has denied to provide the value estimation of jewels as he considers them “priceless.” (“Dresden Green Vault jewelry heist trial starts,” Deutsche Welle, 28 January 2022)
ITALY
Sixth round of Presidential voting ends with no winner
On 28 January, the sixth round of voting took place in Italy for the selection of a new president. At the end of the voting, no winner was declared to succeed Italian President Sergio Mattarella. On the fifth day of voting, nationalist League leader Matteo Salvini made an effort to push votes for conservative Senate president, Maria Elisabetta Alberti Casellati by urging his party members. When the results came in, Casellati had received only 382 votes in place of 505, losing by a small margin. The issue behind the hustle for presidency is, outgoing president Sergio Mattarella has refused to continue second-term despite gaining the maximum number of votes. (“Italy: Six rounds of voting fail to yield new president,” Deutsche Welle, 28 January 2022)
ENERGY
Austria: Government prepares EUR 1.7 billion energy package
On 28 January, Austrian Chancellor Karl Nehammer declared that the government would initiate a EUR 1.7 billion package of measures to support households deal with the hike in the energy prices. During a press conference, Nehammer said: “These are many individual steps that will be taken. The decisive issue is that these 1.7 billion (euros) are transferred to people quickly and they are, from our point of view, a first step. We are following developments very closely.” According to the national electricity and gas regulator E-Control, 60 per cent of Austrian power is generated via hydroelectricity and 14 per cent off natural gas. Energy prices in Europe have been soaring since fears of Russia invading Ukraine began. (“Austria plans 1.7 billion euro package to cushion energy price rises,” Reuters, 28 January 2022)
REGIONAL
Ukraine: Putin and Macron conduct telephonic conversation, Lavrov calls US response better than NATO’s
On 28 January, Russian President Vladimir Putin conversed with French President Emmanuel Macron via phone. A Kremlin readout of the phone call stated that Putin had agreed for further talks with the West while maintaining that the US and NATO had failed to consider their demands in their counterproposals. Following the talks, Russian Foreign Minister Sergey Lavrov stated that the US’ counterproposals were better than those of NATO. Lavrov added that the US response included "grains of rationality" on "secondary issues." Meanwhile, he said that he was “ashamed for the people who wrote these (NATO) texts” as considered them to be "idealized". (“Ukraine tells West not to ′panic′ over Russia tensions,” Deutsche Welle, 28 January 2022; Jennifer Rankin, Kim Willsher and Luke Harding, “Putin accuses Nato of ignoring Russia's concerns as Ukraine crisis simmers,” The Guardian, 28 January 2022)
EU to enforce the classification of branches as subsidiaries
On 28 January, the officials of Brussels proposed to classify the foreign banks as subsidiaries instead of branches. The move will force them to boost up their local balance sheet and bring the branches directly under the supervision of the EU. Apart from this, the position of lenders who opened branches post-Brexit will be entangled. The force's efforts to change the branches into subsidiaries is viewed as a last resort, as many member states have complained the current system of banks is complicated. As per the document: “Scope of systemic importance assessment and of the eventual joint decision seem unclear and exhibit apparent inconsistencies.” (Huw Jones, “Exclusive Foreign banks face bigger capital bill under draft EU plan,” Reuters, 29 January)
INTERNATIONAL
Ukraine: US ambassador calls for UNSC meeting on 31 January
On 27 January, the US ambassador to the UN’s Security Council (UNSC) Linda Thomas-Greenfield has called for a meeting on 31 January to deliberate the “threatening behaviour” of Russia against Ukraine. The ambassador released a statement: “Russia is engaging in other destabilizing acts aimed at Ukraine, posing a clear threat to international peace and security and the UN Charter… This is not a moment to wait and see. The council's full attention is needed now.” The previous meetings held on the issue have been inconclusive as Russia vetoes decisions made against it. (Michelle Nichols, “US asks UN Security Council to meet on Russia, Ukraine,” Reuters, 28 January 2022)
Ukraine: Biden-Zelenskyy holds telephonic conversation
On 27 January, US President Joe Biden held a telephonic conversation with Ukrainian President Volodymyr Zelenskyy to discuss de-escalation efforts regarding the Ukraine conflict. Although Zelenskyy thanked Biden for the “military assistance,” on 28 January, he asked the West to not create ‘panic’ during an international media conference. He stated: “There is a feeling abroad that there is war here. That’s not the case. I am not saying an escalation is not possible … (but) we don’t need this panic.” Meanwhile, a statement by the White House maintained that the Biden administration was considering “additional macroeconomic support to help Ukraine's economy” given the immense pressure it faces from the Russian military build-up. (“Ukraine: Biden, Zelenskyy talk de-escalation with no end to tension in sight,” Deutsche Welle, 27 January 2022; “Ukraine tells West not to ′panic′ over Russia tensions,” Deutsche Welle, 28 January 2022; Jennifer Rankin, Kim Willsher and Luke Harding, “Putin accuses Nato of ignoring Russia's concerns as Ukraine crisis simmers,” The Guardian, 28 January 2022)
US officials spot supply of blood along the Russian-Ukraine border for the wounded
On 28 January, the US officials reported blood supplies being circulated along the Russian border with Ukraine for the wounded. The recent development has further added to the obscurity of the rising tensions between the US and Russia. The Russian Defense Ministry is yet to respond to the comment. On the other hand, Russian President Vladimir Putin has complained that the West is yet to address Russia’s security demands but Russia is still open for diplomatic talks. (Phil Stewart and Vladimir Soldatkin, Alexander Marrow, “Russian buildup at Ukraine border includes blood for wounded, U.S. officials say,” Reuters, 29 January)