Original article at:

http://www.netgazeti.ge/GE/105/News/48634/

BitFury Bitcoin manufacturing company which got the financial funding of tens of million
dollars due to Bidzina Ivanishvilis initiative which was established from the Georgian CoInvestment Fund, announced to the whole world that they will invest USD $100 million to
construct the information reprocessing center in Tbilisi.
The state gave 185 thousand square meters of land for only 1 Georgian Lari ($0.42) to the
BitFury company to execute the project. The company is planning to arrange the Technology
Park along the center at the same territory.
There are the days when the income of BitFury exceeds 200 thousand dollars. Several
ministries do not have the documents about those two companies which were established by
BitFury in Georgia. Nobody knows anything about it at Gori Justice House either. The first
project of BitFury, the center of information processing was opened exactly in Gori, not far
from the local Justice House in July of 2014. As a result from the first month the towns
electricity consumption common index increased by 77 per cent, from 9.9 Million kWh to 17.6
million kWh.
What is bitcoin and how does it work?
Bitcoin is crypto currency the same as digital currency which is used for electronic trading. The
state agencies cannot control it. Bitcoin system is an alternative to bank system. For example: if
somebody wants to send money by bitcoin system from Greece to Georgia (it is faster and
cheaper option), the one can open a bitcoin account in internet and transfer money to the
recipient bitcoin account. Those technical equipments (computers, servers) providing transaction
checking will receive the message about bitcoin transaction. Then through the mathematical
formulae will prove the actual transfer and the amount will appear in recipient account. So called
accountant (or the system which processes the transaction data) will get new bitcoin in
exchange and its current price is 644 GEL (Georgian Lari) for today.
Bitcoin stock major traders (players) try to open as many data processing centers as it is possible,
where there will be installed lots of servers. The number of the servers determines the result of
the transaction number checked by either individual or entity during a particular time period and
the number of new bitcoins obtained by the one.

***
On 1st of June the BitFury Group Public Relationship Service announced the information about
purchasing the land in Gldani area, Tbilisi where the data processing center worth of 100 million
USA dollars should be constructed. The company is going to arrange here such a modern

infrastructure which will cause an interest to the worldwide technological companies and make
them a wish to work in Tbilisi.
BitFury representatives often denote that the main advantage of Georgia is cheap electric
power. Except Georgia the company also owns the data processing centers in Iceland. They tried
to establish such center also in Finland but the project was cancelled rapidly.
Why the price of electric power is so important?
Because these centers consume few millions kWh electric energy per month. Servers
permanently work during 24 hours a day and for their cooling it is necessary that the temperature
of the building would be controlled constantly.
The building in Gori which is one of the huge consumers of the electricity is the white prolonged
building where dozens of servers work loudly. As the company representative says there are 40
people employed in the company. BitFury built that building during one month, at the place
where the cotton factory was functioning during Soviet times. The most important thing is that
the center is located next to the electric station. Georgia Servers Incorporated Ltd hired the
7569 square meter area land for 3 years in terms to pay 3000 Georgian Lari (USD $2750) per
month to the private owner.
Energo-Pro Georgia Joint-stock company supplies Gori with electric power. According the
documents received from the company the total consumption index of the energy in Gori in June
of 2014 was 9.9 million kWh. The same year this index was increased by 7.7 million kWh. Due
to accepted information it is clear that in July 2014 there were registered such 6 customers whose
monthly average consumption of electric power is more than 1000 kWh.
What is the price BitFury pays for electricity in Gori?
The official owner of the center located in Gori is Georgia Service Incorporated Ltd and its 100
per cent share is owned by Mr. Vasil Verulashvili. By the phone conversation he told us that the
director Mr. IrakliAndguladze would provide more competent answers for the questions about
the center. Mr. IrakliAndguladze said that they do not have an experience in relationship with
journalists and sent us to Mr. EpremUrumashvili. Urumashvili is a representative of the Legal
Company Nodia, Urumashvili and Partners and BitFury uses its services.
We pay the rate determined by the regulator committee says Urumashvili. We do not have any
tax benefits. Even if it would be to attain any benefits we will refuse it because our customer
wants to proceed business in the conditions which already exists in Georgia.
Public relation service of Energo-Pro Georgia responds that any commercial consumer of
electric power pays its fee according the voltage and major (big) consumers do not have any
privilege.

According to the documentations received from GENRC (Georgian National Energy and Water
Supply Regulatory Commission) it is clear that for the commercial consumers who are supplied
by the electricity energy 220-380 Volt voltage before 1st of August was 13.5 Tetris (1 GEL=100
Tetris) for per 1 kWh. On 23rd of July the rate was increased by 3.95 tetris for the customers of
Energo-Pro Georgia. The regulator committee already discusses about rate increasing for
TELASI Joint-stock Company customers and the decision will be achieved at the end of the
year. The technological park which will be constructed by BitFury in Gldani area, Tbilisi will
be definitely connected to TELASI.
If we believe to the representatives of BitFury and Energo-Pro Georgia the rate for 1 kWh
should be 0.07971 cents in Gori nowadays. The European Union wide the electricity rate for
heavy industrial type plants was 0.0892 cents. In Iceland where BitFury owns the data
processing center has a rate of electricity 0.03171 cents. In Finland where BitFury was trying
to open a center which project was immediately cancelled the index was 0.0652 cents.
We could not any answer from the Butfury whether the rate increasing would affect the
companys business plans about Gori and Tbilisi.
BitFury claims that they did not have any negotiation about the electricity power fee in
Georgia what contradicts the working style in Iceland and Finland.
Mr. Valeri Vavilov, the founder and the executive director of BitFury started his business in
Iceland in the autumn of 2013. In Iceland Mr. Vavilov had negotiations at least with three
technological centers. He tried to increase the production level to the top level but decrease the
electricity expenses to its minimum, says the source which owns the information about
negotiations between Mr. Vavilov and the representatives of the technological companies
functioning in Iceland.
When he noticed that the server cooling plan worked slowly tried to bring 4.5 ton refrigerator to
Iceland but he was not succeeded. After the center started functioning Vavilov opened the plastic
wall of the building to provide the cold air stream for server cooling. He tried to decrease the
electricity expenses.

BitFury activity in Finland was faster and more chaotic. Through negotiations the company
purchased the part of old, abandoned factory which one was located on the island in the SouthWest part of the country. The center was closed for people and only several people were allowed
to enter there. But in 2014, in the middle of construction period the project was failed. The
project manager of BitFury left Finland and departed to Spain.
Mrs. ZhannaStepanova, BitFury Public Relation Service employee, did not answer to us about
the reason of leaving Finland and why the companys plans had changed.

BitFurys data processing center in Gori

***
In Gori BitFury started to work after that it gained private investor funding worth of 20 million
USA dollars. Among them was Georgia Co-Invest Fund which was established by Mr. Bidzina
Ivanishvili initiative in 2013. According to Mr. Ivanishvilis statement the fund was going to
spend 6 billion USD to execute different types of projects in Georgia and other countries. The
share of Mr. Ivanishvili in the mentioned fund would be 1 billion USD. The fund invested 10
million USD in the Gori center and other 10 million was invested by four foreign investing
companies.
Due to bitcoin industry daily statistics, foreseeing the work of Iceland and Gori centers
BitFury is considered to be the worldwide leader company in bitcoin producing sphere. The
technological park which is going to be built In Gldani (Tbilisi) will be 5 times more powerful
comparing the one in Gori and it will consume 5 times more electricity.

According the Public Register data Georgia Technology Park Ltd owns the plot in Gldani
(Tbilisi) where the park should be built. There were few questions for the General Director of the
company Mr. VladimerShekriladze, who directed us back to Mr. Urumashvili for interview.
In the government order of Georgia is written that instead of accepting the property with the
value of 1 GEL (USD $0.46) company has to invest in the project at least 11.1 million USD
during 8 months; to terminate construction till 3rd of February 2016; to employee at least 10
people during construction works and 20 people at least for 2 years after the center starts its
functioning. These terms were listed in the same way in the letter sent to the National Agency by
Georgia Technology Park Ltd where they were requesting to transfer 185000 square meters lot in
possession for 1 GEL.
Market price of this property is 1850000 GEL written in the conclusion of December 2014
made by Levan Samkharauli Expertise National Bureau. We asked the Georgian Government
Administration and the State Propertys National Agency about the profit from the project and
the reason of transferring 18.5 hectare lot possession for 1 GEL. Both of the state agencies
replayed that they could say nothing more than was written in the governmental order and the
contract concluded with the company.
In the explanation register letter of the governmental order we read: As business environment
improvement is necessary for the country, the project execution promotion represents the interest
of the country.
Due to the rights conceded by the contract Georgia Technology Park Ltd is allowed either to
mortgage or sell the property. In case of selling the property a new owner has to execute those
terms the government obliged the authors of the technological park project. On 18th of June the
company separated the 18.5 hectare plot into three 14hectare, 3 hectare and 1.5 hectare areas.
Nowadays the plot has a status of Recreation Zone 3, where the construction of recreation,
sports, medical and entertainment buildings are allowed. In the government order we read that
the company should apply to the Tbilisi Municipality (City Hall) to change the status of the zone
and only after it will be able to build the center in the mentioned plot. According the letter
received from the City Architecture Service Georgia Technology Park Ltd (BitFury Holding
owns its 100 per cent share) has not applied with the request of changing the functional zone.
What profitwill the Government Budget will attain by project execution?
The same question we asked to Mr. Urumashvili BitFury representative. We asked him to
announce the real numbers but the answer was that the company will pay all those fees which is
recognized by Georgian legislation. Despite of it, as Urumashvili mentioned, the technological
Park Project will be the bonus for the country image.
Silicon Valley style area will be arranged in Tbilisi where worldwide major technological
players will be invited says Urumashvili. We have already asked the government of Georgia to

give this area (territory) free economic zone status. We would like to offer low taxes (fees) and
comfortable work conditions to the companies which decide to make their business here. BitFury
Group will be in role of the host and as a rent probably will get the income from other
companies located in this zone.
The government has not announced anything about formation of free economy zone in Tbilisi
yet.
On 17th of June Urumashvili said that Georgian Co-InvestmentFund was not going to finance the
technological park project. On 9th of July BitFury announced receiving investment worth 20
million USD. Among those investors are: Georgia Co-Investment Fund, DRW Venture Capital
established in the USA and iTech Capital.
The most of the staff of iTech Capital are the managers who were educated in Russia. The fund
has its offices in Riga, Moscow and the Cayman Islands. In the interview with CoinDesk Mr.
Gleb Davidyuk - the founder of iTech Capital said that their fund is interested in fast developing
technologies and they are ready to make more investments in the project on the future as well.
We sent questions about their relationships and feature plans with BitFury to the company
public relation service by e-mail but we did not receive any reply.
Now, when you look at the plot in Gldani, it is hard to imagine 100 million USD worth
technological park on this place. But in relationships with governmental services you understand
that the project will not be impeded by governmental regulations.
The Ministry of Environment and Natural Resources Protection does not have any documents
which are connected to the BitFury Group and Georgia Technology Park Ltd formed by
BitFury.
The Ministry of Energetic does not have any documents connected with the same companies
either, despite of the circumstance that the technological park will be one of the major consumers
of electricity.
After that we sent the letter to the Ministry of Finance (where we requested to obtain the
information about the tax regulations prescribed for crypto-currency producers), the ministry
officer called us and asked what we had mentioned in crypto-currency. Later we had been
answered that our tax system does not obtain any records about the ones procuring cryptocurrency.