Electricity consumption of miners in Kazakhstan: an issue for government

The government of Kazakhstan is concerned about the electricity consumption of miners in the country, especially unregistered ones. New directives are announced in order to better regulate the sector.

Cryptocurrency miners in Kazakhstan: pressure on the electricity grid

According to an article from November 10, 2021, government officials in Kazakhstan estimate that unregistered cryptocurrency miners who do not pay taxes and other fees in the country could consume twice as much electricity as registered miners . Miners could consume up to 1.2 gigawatts , or about 8% of the country’s total power generation capacity .

Kazakhstan is the second country , behind the United States, that delivers the most hash power on the Bitcoin network (BTC) . Data from the Cambridge Center for Alternative Finance shows that Kazakhstan contributed more than 18% of the average monthly share of the network hash rate in July 2021, compared to more than 35% for the United States.

Kazakhstan is currently facing a power shortage caused by the rapidly growing number of #cryptocurrency miners in the country after #China‘s ban.🔋The Kazakh government has now turned to its northern neighbour Russia 🇷🇺 to buy additional energy capacity.🔌 pic.twitter.com/9w2NnSp0XA

— Appics (@appics_official) November 11, 2021

The country attracts miners thanks to its electricity sold at a relatively low price . China’s crackdown on mining operations has further increased their numbers in Kazakhstan. Major mining pools like BTC.com and mining companies like Canaan have found refuge there.

Regular and illegal minors: new legal mechanisms in Kazakhstan

Faced with this situation, Kazakhstan’s Deputy Energy Minister Murat Zhurebekov revealed that the authorities intended to issue a directive aimed at limiting the electricity consumption of unregistered minors . However, he did not provide details of how the authorities would go about locating them.

Kazakhstan’s President Kassym-Jomart Tokayev had already signed in June 2021 a law imposing an additional tax, which could amount to $ 0.00233, per kilowatt hour , on electricity used by miners. The text should enter into force from January 2022.

Kazakhstan must now juggle between on the one hand, the financial advantages of the influx of miners into the country, and on the other hand the significant impact of miners’ activities on the electricity grid. Kazakhstan is raising the tone against unregistered minors. But the country is also building a healthy environment for cryptocurrencies. It could in fact  authorize banks to offer services linked to the latter.