Cryptocurrencies potentially bolstering Rogun Dam project in Tajikistan?
The World Bank has committed to providing an initial $350 million grant to help complete the first phase of the Rogun hydropower dam project in Tajikistan, despite concerns over financial and environmental risks. This decision paved the way for additional funding, with the Asian Infrastructure Development Bank offering a $270 million loan and the Kuwait Fund for Arab Economic Development extending a $100 million line of credit.
The potential for Rogun to serve as a hub for cryptocurrency production may have played a role in securing international financing, according to some analysts. If realized, this could make the project financially viable. Rogun is intended to become the world's tallest dam, producing 3,600 megawatts of power, a capacity that could potentially support vast quantities of cryptocurrency mining.
The World Bank defended the project as a potentially transformative source of clean energy, stating it could improve regional welfare and contribute to decarbonizing Central Asian power grids. However, the quickly evolving electricity market in the region, coupled with crypto-mining's environmental impacts, cast doubt on this argument. A UN report published in 2023 highlighted the substantial carbon footprint, water consumption, and land use associated with global Bitcoin mining activities, with hydropower being the primary renewable energy source powering the Bitcoin mining network.
Financial institutions may be hesitant to discuss the Rogun-crypto connection due to negative public perception. "Mining cryptocurrency is not a story about the development of a country or a region," said Alexander Kolotov, head of the environmental watchdog group Rivers Without Boundaries. "A mining farm does not create jobs for local residents, does not develop the surrounding area. It produces a purely virtual and extremely volatile product."
For Tajikistan, the world's poorest state in Central Asia, Rogun is seen as a means to address its ongoing energy crisis and boost economic development through large-scale electricity generation. Plans call for exporting approximately 70% of the electricity generated by the hydropower station, providing significant income for the government. However, concerns persist over escalating construction costs and the growing competitiveness of solar and wind power generation, which could render Rogun financially uncompetitive before it reaches its full potential, costing an estimated $6.4 billion to complete.
The project's completion may be hindered by geopolitical factors. Neighboring countries, such as Kazakhstan and Uzbekistan, are pursuing alternative energy solutions and establishing export partnerships with other nations. Meanwhile, Kyrgyzstan is also developing its own hydropower project, Kambarata-1, and exploring nuclear power, adding to Rogun's competition. In contrast, the Bratsk hydropower plant in Russia's Irkutsk Region has emerged as a potential model, with a locally based company, BitRiver, rapidly expanding its cryptocurrency mining operations using comparatively cheap power generated by the plant.
The future of Rogun as a driver of economic growth and prosperity for Tajikistan remains uncertain, with the country routinely ranked among the least democratic and most corrupt states worldwide. "I am sure that we will hear about the [crypto] mining [link] at the Rogun HPP only when the budget of the project swells to some completely indecent size," said Chinara Aitbaeva, director of the Kyrgyzstan-based watchdog group Nash Vek. "That's when it's possible to present the option of creating crypto-mining at [Rogun] as an additional instrument for project profitability."
Reporting by Alexander Eskendirov, a freelance reporter based in Central Asia
The World Bank's decision to provide funding for the Rogun hydropower dam project may also be influenced by its potential to support cryptocurrency mining, making the project financially viable. Despite concerns about the environmental impacts of cryptocurrency mining and the increasing competitiveness of solar and wind power, the prospect of significant income from electricity exports could boost Tajikistan's economy, with cryptocurrency mining possibly happening at Rogun in the future.
