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Illustration by Sashkin / Shutterstock. 2019.
Illustration by Sashkin / Shutterstock. 2019.

This is the story of a virtual gold-rush in places that don't exist—a journey into the scramble for cryptocurrency in Europe's breakaway regions.

Cryptocurrency mining is booming in Europe's grey zones. In Abkhazia, one of two regions annexed by Russia during its brief war with Georgia in 2008, the government recently had to cut 15 cryptocurrency mining factories off the national grid after they caused a major power shortage. Crimea, which Russia seized from Ukraine in 2014, is setting up a training center where other unrecognized states can learn how to develop their cryptocurrency mining industries. Transnistria, a breakaway from Moldova that survives on Russian subsidies, is already the 4th biggest cryptocurrency mining nation in Europe and is set to rise further up the ranks.

The Moscow connection is no coincidence. Cryptocurrencies could offer Russia a way around the sanctions from the United States that are battering its real-world currency—and its breakaway regions have everything they need to mine them. Moscow provides them with electricity that is either heavily subsidized or free, while their abandoned Soviet-era factories make perfect homes for the huge banks of servers.

This project untangles how and why Russia is nurturing this industry in its periphery and what that might mean for the U.S. sanctions regime.