kazak crypoto mining

Kazakhstan crypto mining results in power shortages

Some areas in Kazakhstan are suffering from major electricity shortages due to a surge in crypto mining activities. The sudden power shortages came after a large number of crypto miners from China flocked to Kazakhstan due to the crackdown on crypto in China.      

According to the report by the Financial Times, the demand for electricity in Kazakhstan climbed from 2% to 8% at the beginning of the year. Since October, blackouts have become constant in six regions. The country’s electrical grid operator Kazakhstan Electricity Grid Operating Company (KEGOC) stated that 50 registered miners will be given electric power. However, if the grid encounters any issues or failures, they’ll be the first ones to be disconnected. 

The Financial Times conducted some research and estimated that over 87,849 power-intensive mining rigs from China reached Kazakhstan. This made the country the second-largest crypto mining spot in the world next to the United States.

According to officials, the electricity shortages were detected from several unregistered crypto miners called ‘grey miners’ that are illegally mining crypto in their homes. Some speculations suggest that mining firms moving from China to Kazakhstan might have something to do with the electricity shortages. 

In a report by Coindesk, the Ministry of Energy proposed a law restricting newly licensed cryptocurrencies from going over 100 megawatts (MW) per mine. The move was caused by the emergency shutdowns of Kazakhstan’s three coal-fired power plants. Electricity is relatively cheaper in Kazakhstan compared to other countries which makes it attractive to crypto enthusiasts hoping to make a profit from crypto activities.

According to The Verge, Kazakhstan will begin requiring legitimate miners to pay for using electricity starting in 2022. The move will make it easier to distinguish legitimate miners from grey ones. The plan is to charge registered miners with 1 Kazakhstan tenge (US$0.0023) per kilowatt-hour (kWh). 

The power shortage was experienced in different parts of the country. Kazakhstan-based mining company Xive.io had to shut down a crypto mining farm and dismantle about 2,500 mining machines.

Didar Bekbau, co-founder of Xive took to Twitter to share his thoughts on the news: ‘Little sad to shut down our mining farm in south KZ. Last container is ready to be sent. So much work, people, hopes are ruined’. 

Find more cryptocurrency updates when you proceed to Cryptoshimbun!

Leave a Comment