Armenia aims to position itself as a Bitcoin mining hub

At the end of August, a digital platform called ECOS Free Economic Zone delivered good news from a country that rarely sparks on the global crypto map — Armenia. ECOS reported adding 60 megawatts (MW) of capacity to its power plant-based facility, operating since 2018. 

Situated at one of the hydroelectric plants on the Hrazdan river, the mining facility gets its electricity supply directly from the high-voltage grid and uses the site’s infrastructure to power containers. The platform’s representatives noted that ECOS could expand to an additional 200MW of clean electricity. For comparison, the Berlin Geothermal plant in El Salvador gives away 1.5MW of the 102MW it produces to crypto miners, while the Greenidge Generation near the shore of Seneca Lake in the State of New York should have produced about 44MW.

Given the controversial developments with crypto mining regulation in the Commonwealth of Independent States (CIS) region — countries of the former Soviet Union — perhaps it is high time to assess the industrial potential of this post-Soviet republic, towering 1,850 meters above sea level.

Modest publicity

The most certain fact about Armenia regarding crypto is that we don’t get much information from the country. In 2018, the Armenian Blockchain Association joined its counterparts from Switzerland, Kazakhstan, Russia, China and South Korea in filing a joint lawsuit against tech goliaths such as Google, Twitter and Facebook for banning crypto-related advertising. The lawsuit’s further destiny is unclear, though the restrictions on crypto ads have been uplifted at least to some extent in recent years. 

The same year, Prime Minister Nikol Pashinyan and other top officials reportedly attended the opening ceremony of a new mining farm touting itself as one of the world’s largest. By local media estimates, around $50 million had been invested in the creation of the farm with 3,000 Bitcoin (BTC) and Ether (ETH) mining machines and a planned capacity of 120,000 in the future. The farm is a joint venture by major Armenian conglomerate Multi Group, founded by businessman and politician Gagik Tsarukyan and controversial international mining firm Omnia Tech. No updates about the work of the farm have hit the media radar since the very opening press releases.

Perhaps the most important and publicly visible development from the country of three million was the failure of efforts to form a shared stance regarding cryptocurrency regulations by the Eurasian Economic Union (EAEU). In 2021, a high official from EAEU revealed that member states did not support a recent initiative for a uniform cryptocurrency regulatory framework within the union. While no insights on what exact members sabotaged a project are available, the failure itself will have a long-lasting impact on the whole region, as the EAEU includes not only Armenia and Belarus but also such mining heavyweights as Russia and Kazakhstan.

Large ambitions

While there are no traces of the existing legislative framework on crypto in the country (and no prohibition as well), Armenia stepped on its regulatory path back in 2017 by forming a committee on blockchain technologies. 

In 2018, the local Ministry of Finance launched a working group called JAF Crypto Market Intelligence Unit (JAF CMIU), whose task was to study possible regulatory scenarios. That same year, a special Free Economic Zone (ECOS) was established by the government decree to help attract and develop blockchain and crypto startups.

The potential residents of the 2.2-hectares ECOS are granted the financial benefits of zero value-added tax (VAT), the absence of import and export duties and no tax burden on property and real estate. As the official page goes, the ECOS also offers multifunctional workspaces, a research and development center, acceleration programs and the infrastructure comprised of a power plant, data center and mining farm with Bitmain equipment. The only tax to which the zone residents…