Crypto Analytics

Electricity deficit forces crypto miners to leave Kazakhstan

Power shortages plagued Kazakhstan’s booming crypto mining industry this year. A media report found that some miners, including some of those who moved in amid China’s crackdown on the sector, are now trying to relocate to destinations with more stable energy supplies like the United States.

Miners are closing crypto farms due to problems in Kazakhstan with generating electricity

Kazakhstan has become a crypto mining hotspot since China put in place a government offensive against Bitcoin miners in May. The Central Asian nation maintains limited electricity tariffs and is a major producer of fossil fuels. The neglected infrastructure and inadequate generation capacities, however, cannot cover the rapidly increasing demand for electricity for the energy hungry coin minting devices.

Authorities have accused the growing deficit – consumption rose by 7% in the first three quarters of the year – on growing mining Data center, and the legislature has suggested Introduction of higher electricity tariffs for miners. Industry representatives have complained that they were treated unfairly. “They made mining a scapegoat,” Didar Bekbauov, founder of local mining hosting company Xive, said on social media in early December.

The manager posted his comment on Twitter after Xive was forced to shut down its main facility in southern Kazakhstan when electricity suddenly went off last month, Nikkei Asia noted in a report. The company still operates another mining farm in the country, but is also exploring opportunities to relocate some operations to the United States

In November, the Data Center Industry and Blockchain Association of Kazakhstan reached an agreement with the country’s network operator, KEGOCto ensure an uninterrupted power supply for the registered miners. When the state energy company failed to perform its end of the deal, mining companies began shutting down their facilities in the country. Another large crypto farm operator, Bitmain-backed Bitfufu, has closed its crypto farms in Kazakhstan and is also moving to the US.

While the restrictions imposed by the power distribution company have impacted regulated crypto mining companies, small crypto farms in the shadow economy have continued to mint digital currencies in basements and garages. The “gray miners” burn large amounts of electrical energy and present the government in Nur-Sultan with another challenge. “Unfortunately, it is very difficult to get rid of,” Alan Dorjiyev, president of the Association of the Crypto Industry, told Nikkei.

Kazakhstan initially welcomed cryptocurrency miners and took steps to regulate the industry through legislation. Estimates released in October suggested the country could expect crypto mining around $ 1.5 billion and tax revenues of over $ 300 million over the next five years. A new tax of $ 0.0023 per kilowatt hour of electricity consumed by registered crypto mining companies will be imposed in January 2022. Kazakhstan also plans to build power plants with a combined 3,000 megawatt generation capacity in the coming years, expand the share of renewable energy sources in its energy mix, and is considering nuclear power.

Do you think Kazakhstan will manage to solve its power supply problems and provide enough power for its crypto mining industry? Let us know in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy journalist from Eastern Europe who likes Hitchens’ quote: “Being a writer is what I am and not what I do.” In addition to crypto, blockchain and fintech, international politics and economics are two more Sources of inspiration.




Photo credits: Shutterstock, Pixabay, Wiki Commons


Source: Crypto News Austria

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