A stable source of electricity is the key to success in cryptocurrency mining, because just one machine mining digital money can consume as much electricity per month as a household in a small apartment, he told "Vijesti". Marko P. (real name known to the editorial staff).
Marko has been mining the world's most valuable cryptocurrency - bitcoin - in Montenegro for five years, using so-called ASIC devices that are designed just for mining and are incomparably more powerful than graphics cards.
Cryptocurrencies are digital forms of money that do not have a physical form like banknotes or coins.
An ASIC (Application-Specific Integrated Circuit) is a specialized chip designed exclusively for cryptocurrency mining, and current-generation devices cost between 3.000 and 6.000 euros.
Marko claims that to get into mining seriously, you need between five and ten thousand euros, that the earnings are not stable, and that there are periods when mining is on the verge of profitability. He also warns that maintaining the equipment is demanding because the devices work under heavy load, and ASIC machines are extremely loud and require a separate space.
The newspaper's interlocutor said that he used electricity from the regular power grid with customized installations, explaining that one ASIC device consumes between 2,5 and 3,5 kilowatts per hour and operates non-stop.
"When you add everything up and subtract it, mining paid off financially for me, but not through a stable monthly income. The biggest profit came because I didn't sell the bitcoin immediately, but rather kept it and sold it later, when the price was significantly higher," he says.
Cryptocurrency mining is the process in which powerful computers work continuously to verify and confirm transactions on a blockchain network and add new blocks. For this work, miners consume large amounts of electricity and in return receive a reward in the form of new cryptocurrency units or transaction fees.
It is not known how many citizens are involved in cryptocurrency mining, as this activity is not legally regulated in Montenegro. Montenegro does not yet have laws regulating cryptocurrency mining and the field of digital assets. In 2020, the government announced the drafting of a Law on Cryptocurrencies, while in September 2024, the Ministry of Finance announced that they were working on the law, in cooperation with the Central Bank of Montenegro and the Capital Market Commission.
CRYPTO-MINER'S WORKDAY
Marko P. explains that the network security and transaction confirmation are essentially “mined”, and that he exclusively engaged in bitcoin mining. He claims that he chose this cryptocurrency because it is the most stable, the most serious and the most valuable in the long run, explaining that he entered the world of mining out of curiosity and interest in blockchain technology. He states that he initially did it as a hobby, but that it later grew into a “more serious story”.
He states that the "workday" of a cryptocurrency miner does not resemble a classic job.
"Most of the time, the systems work by themselves. I mostly checked if the devices were online, what the temperatures were, if the hash rate was stable, and if the pool was paying out rewards. I only reacted when something stopped, when the devices overheated, or when the power went out," he said.
He explains that “hash rate” is a measure of the total computing power involved in mining.
“The higher the hash rate, the more devices are participating and the more competition there is. A high hash rate makes the network more secure, but at the same time it means it is harder to get the reward. Today, the hash rate is huge compared to the early years, which directly affects the profitability of mining,” he added.
Marko states that during mining, the devices operate under heavy load, dust accumulates quickly, fans are damaged, and power supplies sometimes fail. If the devices are not cleaned and monitored regularly, failures are inevitable.
According to him, when the power goes out, mining stops immediately and there is no profit until the system is back up. He also warns that frequent outages or poor power quality can damage devices, which increases costs.
"Mining earnings are never stable, oscillations are frequent and sometimes large. They depend on the price of the currency being mined, the network weight, the price of electricity and the so-called halving event. It happened that earnings varied by thirty or forty percent from month to month. There were periods when the operation was almost without profit, and even on the verge of profitability," claims the interlocutor.
Halving events are programmed reductions in the reward for miners, which occur at predetermined intervals and serve as an anti-inflation method.
Marko P. says that mining can become unprofitable, especially when the price of bitcoin falls or the network weight increases. One bitcoin, at the time of writing, is worth almost 75.000 euros.
"This happens regularly and those who enter this story must be prepared for such phases. Many turn off their devices and wait for more favorable weather," he said.
Speaking about the problems he faced, he stated that these included technical failures, overheating, power outages, noise, but also legal uncertainty.
“… This further created confusion, as no one knew exactly how such activity was treated under the law,” he claims.
NO DATA ON STOLEN ELECTRICITY
The presence of cryptocurrency mining in Montenegro is also demonstrated by the seizures of equipment at border crossings at the entrance to the country. At the Dobrakovo border crossing in January 2024, undeclared mining equipment worth 6.700 euros was found on a Serbian citizen. Last March, six mining devices, estimated at 30.000 US dollars, were seized from a Hungarian citizen at the Ilino Brdo border crossing.
The Supreme State Prosecutor's Office told "Vijesti" that they have no data on unauthorized cryptocurrency mining because the Criminal Code does not prescribe a criminal offense related to mining, but rather criminal offenses against property, theft and aggravated theft.
In October 2020, over 250 computers were discovered in a residential building in Zabjelo, used by the company “PS Gradnja”, which were illegally connected to a nearby substation in order to mine cryptocurrencies. The Basic Court in Podgorica has ruled that the company’s owner Dejan Petričević in February 2021, sentenced to six months in prison for stealing electricity.
The court found that in the period from February 14, 2018 to October 7, 2020, he obtained unlawful material gain, while the debt for stolen electricity amounted to 308 thousand euros.
The Montenegrin Electricity Distribution System (CEDIS) filed 22 criminal charges for electricity theft in the amount of over 10.000 euros between 2020 and September last year, but the court proceedings could not establish that the electricity was illegally used for cryptocurrency mining. They also state that the compensation sought for the 22 criminal charges amounted to 527.505 euros, and that the prosecution dismissed 11 charges.
According to legal procedures, CEDIS teams, when combating possible electricity theft, can determine irregularities exclusively by checking the metering point, while internal installations are under the jurisdiction and responsibility of the building owner. When teams determine unauthorized electricity consumption, CEDIS files criminal or misdemeanor charges.
"CEDIS can only see the total electricity consumption at the metering point, but not which devices are consuming that energy, nor does it have the right to enter the facility to check the equipment. We do not conduct inspections of users' devices, nor do we have a legal basis to determine whether someone is using equipment for cryptocurrency mining," CEDIS claims.
The Energy Law, which was adopted last March, more precisely defines the forms of unauthorized electricity consumption and arbitrary connection of a facility to the electricity grid, as well as methods of compensation for damage and penalties for perpetrators.
The verdict against the owner of the company “PS Gradnja” states that CEDIS inspectors reported unusually high losses at the “19. decembar” transformer station in Podgorica, even though it is a network with a small number of consumers. CEDIS engineers found additional, unknown cables during inspections, and were repeatedly denied entry to the company's premises.
In October 2020, the police and CEDIS, with a court order, searched the company's business premises and found three direct connections to the substation, through which 252 devices and ten air conditioning systems were powered - equipment worth several million euros.
NOT WORTH IT FOR SMALL PLAYERS
Founder of the non-governmental organization "Bitcoin Network of Montenegro" Nikola Grbovic He told Vijesti that during mining, computers consume electricity to verify transactions and ensure the security and decentralization of the network. He also states that in Bitcoin, this process is based on enormous computing power, which is why mining is not possible without specialized equipment and a stable and cheap source of electricity.
Grbović emphasizes that bitcoin mining is unprofitable for small, so-called "retail" miners.
"The network is so large and powerful that huge corporations with tens of thousands of machines and direct contracts for electricity at extremely low prices are now competing in it. There are also so-called lottery miners - individuals who independently 'mine' blocks, although they have a small chance of winning a prize," he said.
"Mining cryptocurrencies, such as Ethereum, could previously be profitable even on home graphics cards, but this digital currency has switched to a different protocol and can no longer be mined. Other cryptocurrencies can still be, and in some cases can be profitable, but they carry far greater risk. Most often, these currencies lose value in the long term compared to Bitcoin, so the potential profit remains questionable," Grbović added.
Many countries have a regulatory framework for cryptocurrency mining, with local regulations on taxation, consumer protection, and anti-money laundering required. In Russia, mining is permitted as a business activity with mandatory registration for larger miners, while subsidized electricity may not be used for mining. In Norway, miners are treated as industrial consumers, while in Germany, mining is taxed as a business activity.
Mining has been banned in China since 2021, in Iran it is only allowed with special permits, while in Kosovo mining from the public network is prohibited.
Grbović claims that the biggest obstacle to cryptocurrency mining in Montenegro is the complete lack of a regulatory framework, emphasizing that Montenegro should promote mining due to its energy structure.
"Our country has significant hydropower capacities, but a large part of that potential is still not fully utilized. Mining can use surplus electricity that would otherwise remain unused, especially in systems based on hydroelectric power plants and renewable sources," the interviewee said.
He cited the United States of America (USA) as an example, where in the states of Texas, Wyoming and Kentucky mining is a legally regulated activity, and companies have long-term contracts with electricity distribution companies and are treated as large industrial consumers. In Texas, mining companies are included in the electricity consumption management system and receive financial compensation for this service.
"When electricity is cheap and plentiful, miners use it. When electricity is more needed by households and businesses, they temporarily turn off equipment and give up capacity to the grid. In this way, mining does not function as a permanent consumer, but as a flexible regulator that contributes to the stability of the power system," he said.
Speaking about profitability, Grbović said that it depends almost exclusively on the price of electricity, explaining that, according to industry standards, mining becomes sustainable when the price of electricity is below approximately $0,05 per kilowatt-hour, while the range of $0,03 to $0,04 is considered optimal.
"Large companies that have access to such prices can operate profitably even during unfavorable market cycles. That is why mining today is mainly done by large companies with thousands of devices, direct energy contracts and professional infrastructure," the interlocutor underlined.
According to him, in this context, Montenegro has a real chance, with clearly defined rules and smart regulation, to attract investments in this area, especially in parts of the country where there are energy surpluses and weaker industrial activity.
"Mining would then not represent a cost to the system, but a way to convert domestic resources into additional economic value," says Grbović.
He noted that the Bitcoin market essentially functions perfectly without state influence, but that for companies that want to operate in the system, it is still important to have clearly defined and favorable "rules of the game."
"Such a type of regulation would not disrupt the market, but would enable safer and more predictable business conditions, which is key to attracting serious investors to Montenegro," the interlocutor emphasized.
Hundreds of devices for profit
Grbović claims that most profitable mining operations today start with dozens or hundreds of devices, while large companies operate farms that number several thousand ASIC machines.
He explains that the price of a device depends on the model, efficiency and current market conditions.
"Older or less efficient models can be found in the range of around 1.000 to 2.000 euros, while more modern devices, such as the Bitmain Antminer S19 or newer generations, usually cost between 3.000 and 6.000 euros per piece, and sometimes more," said the interviewee.
All things considered, mining paid off financially for me, but not through a steady monthly income. The biggest profit came because I didn't sell the bitcoin right away, but rather held it and sold it later, when the price was significantly higher.
Marko P. explains that during the mining process, computers solve complex mathematical operations 24 hours a day to confirm transactions and add new blocks to the blockchain network.
"On a network-wide level, a new block is found on average every ten minutes, but it is never done by one person alone. Mining is done through pools, where multiple miners join together and share the reward according to the power they each put into the network," he claims.
Kosovo bans off-grid mining
Kosovo banned cryptocurrency mining in early 2022, after the country's parliament introduced emergency measures in late 2021 due to the country's energy crisis.
In January 2022, Kosovo institutions seized nearly 700 cryptocurrency mining devices.
Four municipalities with a majority Serb population in northern Kosovo (Northern Mitrovica, Zvecan, Leposavić and Zubin Potok) represented a particularly “attractive location” for mining, because citizens in these municipalities have not paid their electricity bills for decades, and Kosovo authorities estimate that the debt for consumed electricity in these municipalities amounts to around 12 million euros annually.
Kosovo's Crypto Asset Law, which was adopted after the ban on digital currency mining, stipulates that mining is only permitted if an alternative source of electricity is used, and not if electricity is taken from the universal grid - this restriction still applies.
Apartment fire and the biggest mistake
Marko P. told "Vijesti" that unpleasant situations occurred during the period when he was mining bitcoin.
“… There are also private anecdotes, such as the apartment of a friend of mine, where a fire broke out due to overheating and high electricity consumption due to mining. This shows how dangerous it is to mine in an apartment without proper ventilation and safety measures…”, he said.
He cites the biggest mistake he made in five years of mining as purchasing equipment during moments of "market euphoria," when device prices were too high, which, according to him, significantly extended the return on investment.
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