Kosovo bans cryptocurrency mining to save electricity amid blackouts

The Balkan state is importing energy at high prices due to power outages

Kosovo follows China’s lead by banning cryptocurrency mining (Getty Images)

Kosovo has banned the mining of cryptocurrency in a bid to reduce electricity consumption amid a severe energy crisis.

The decision, which was announced this week, comes a month after the country’s government announced a 60-day state of emergency, allowing it to spend more on energy imports and to introduce power cuts.

Power outages plunged the Balkan nation into difficulties late last year, with its largest coal-fired power plant closing in December due to technical issues. The country of 1.8 million people normally relies on the burning of lignite, a type of coal.

As a result of these problems, Kosovo now has to import 40 per cent of its energy at a time when European gas prices are ballooning. They rose by more than 30 per cent on Tuesday because of limited supply from Russia.

The government targeted cryptocurrency mining, a process in which “miners” verify blockchain transactions in exchange for virtual coins, because it uses significant amounts of energy.

"All law enforcement agencies will stop the production of this activity in cooperation with other relevant institutions that will identify the locations where there is cryptocurrency production," the energy minister Artane Rizvanolli said.

The mining of digital currencies such as Bitcoin is popular in Kosovo as energy prices are typically cheap. Such work is growing fastest in the north of the country, a region largely populated by ethnic Serbs.

Speaking on condition of anonymity, one miner in Kosovo told Reuters that he makes 2,400 euros (£2,000) in profit each month, after spending 170 euros on electricity.

Kosovo’s move to end the practice follows a permanent ban in China, which came into effect last year. Elsewhere, Iran also temporarily stopped digital mining for four months over concerns about energy usage.

Additional reporting by agencies