Kazakhstan Starts Troubled With The Increase In The Number Of Crypto Miners, Here's The Cause!

Murat Zhurebekov, Deputy Minister of Energy of Kazakhstan. (photo: twitter)

JAKARTA – After contributing as the second largest country in Bitcoin hash rate, Kazakhstan's energy network may not be ready to handle the growing number of cryptocurrency miners. Miners from China and other countries are now moving their business to the country because they want to take advantage of the country's low-cost electricity.

In a Wednesday report from Reuters, government officials in Kazakhstan estimated that unregistered crypto miners in the country could consume twice as much power as registered ones to avoid paying taxes and other fees. Together, all crypto miners in the country can use as much as 1.2 gigawatts, or about 8% of Kazakhstan's total power generation capacity.

According to Murat Zhurebekov, Deputy Energy Minister of Kazakhstan, addressing potential tensions on the country's power grid "cannot be delayed any longer." He said officials planned to issue a directive that would limit the power consumption of unregistered crypto miners but didn't specify how, or rather they haven't been able to figure out how.

With the exodus of crypto miners following the government crackdown in China, both Kazakhstan and the United States are currently the countries responsible for the largest contribution to Bitcoin (BTC) hashing power. Major mining pools, including BTC.com and companies like Canaan, have set up shop across the border.

In June, the President of Kazakhstan, Kassym-Jomart Tokayev, signed a law imposing an additional tax on energy used by crypto miners operating legally in Kazakhstan. The law will reportedly introduce a surcharge of $0.00233 per kilowatt-hour, which is scheduled to take effect from January 2022.

According to data from the Cambridge Center for Alternative Finance, Kazakhstan made up more than 18% of the average monthly hash rate share for the BTC network in July. While the US contributed more than 35%. Cointelegraph reported in October that some estimates put cryptocurrency mining revenue in Kazakhstan at $1.5 billion over the next five years.