Bitcoin instead of light: how mining will ensure the payback of the Rogun Dam
The Government of Tajikistan has announced plans to create a national state-owned company in the field of artificial intelligence (AI) and the construction of large-scale data centers near hydroelectric power plants. Officially, these initiatives are presented as a technological breakthrough and a way to attract multinational corporations, but experts believe that behind the AI sign lies the preparation of infrastructure for industrial mining of cryptocurrencies. It is this factor that can become a key payback tool for the expensive Rogun Dam project, in which leading international development banks are now actively investing.
The Minister of Industry and New Technologies of Tajikistan, Sherali Kabir, in an interview with Jumhuriyat, stressed that the country has unique advantages for hosting data processing centers. According to him, foreign companies are interested in the republic because of access to “green” energy and water resources. The minister noted that 98% of electricity in the country is generated at Dams, and the availability of large volumes of water is critically important for cooling servers. An additional argument in favor of the technological hub is the presence in the bowels of Tajikistan of 12 out of 31 rare metals necessary for the production of microcircuits. The official is confident that the use of these technologies will attract financing to the hydropower sector and enhance the country’s reputation in the international arena.
Nevertheless, analysts view these statements through the prism of the financial problems of the Rogun Dam under construction. The project of the highest dam in the world with a capacity of 3,600 megawatts requires enormous investments, the estimate of which has already reached 6.4 billion dollars and continues to grow. For international financial institutions and development banks lending to the construction site, the issue of return on investment is extremely acute. In conditions when neighboring countries – Kazakhstan, Uzbekistan and Kyrgyzstan – are developing their own generating capacities, including nuclear power and renewable energy, the export potential of Tajik electricity is under threat of competition. In this situation, cryptocurrency mining, which requires huge amounts of electricity, becomes the most understandable and guaranteed way to monetize the generated gigawatts.
Regional director of the international ecological coalition “Rivers without Borders” Alexander Kolotov notes that, given the gigantic energy generation, the mining capacity on Rogun should be “simply fantastic.” In fact, the Rogun Dam can turn into a source of “golden bitcoin eggs”, ensuring the financial viability of the project. This scenario is confirmed by the practice of other countries: an example is the Bratsk Dam in Russia, where BitRiver has deployed the largest cryptocurrency mining centers in Eurasia using cheap hydropower. Probably, it is precisely this model of the “anchor consumer” that investors consider as insurance against the risks of unclaimed energy in foreign markets.
International donors, including the World Bank, publicly defend the Rogun Dam as a transformational “clean energy” project that contributes to the decarbonization of the region. However, the rapid transformation of the Central Asian energy market and the reputational risks of mining make it necessary to avoid direct mentions of the crypto industry. According to a study by the Institute of Water Resources, Environment and Health of the UN University, published in October 2023, bitcoin mining has a significant negative impact on water and land resources, which directly contradicts the environmental standards declared by Western financial institutions. Hydropower already provides 16% of the needs of the global mining network, but the recognition that the funds of development banks are used to create crypto farms instead of improving the well-being of the local population may cause a scandal.
Skeptics point out that mining farms, unlike real production, do not create a significant number of jobs and produce an extremely volatile virtual product. The director of the public organization “Our Century” Chinara Aitbayeva is sure that officially the mining facilities at the Rogun Dam will be announced only when the project budget is inflated to critical proportions. At this point, the creation of a crypto cluster will be presented to the public and creditors as the only possible additional tool for long-term construction payback. Thus, the rhetoric about the development of artificial intelligence serves as a convenient facade for legitimizing the gigantic energy consumption of future mining centers designed to save the economy of the Rogun project.
Alexander Eskendirov (Rivers.Help!)
Original (in Russian): Биткоин вместо света: как майнинг обеспечит окупаемость Рогунской ГЭС
