With the exodus of crypto miners following a government crackdown in China, both Kazakhstan and the United States currently stand as countries responsible for the largest contributions to the Bitcoin (BTC) hashing power. Major mining pools, including BTC.com and firms like Canaan, have migrated crossborder
Reuters reported in October that some estimates put cryptocurrency mining revenue in Kazakhstan at $1.5 billion over the next five years. According to data from the Cambridge Centre for Alternative Finance, Kazakhstan generated more than 18.10% of the average monthly hash rate share for the BTC network as of August, with the U.S. contributing more than 35.40%
Bitcoin Hashrate Taps 194 Exahash per Second on December 8, Mining Difficulty Jumps Over 8% Higher 3 Days Later. While bitcoin prices have consolidated around the $50K zone, the network’s hashrate has reached an all-time high (ATH) on December 8, 2021, tapping 194.95 exahash per second. Bitcoin miners have increased their processing power a great deal despite the fact that mining bitcoin is 8.33% harder to mine since December 11.
Crypto miners in the country could be using as much as 1.2 gigawatts or roughly 8% of Kazakhstan’s total power generation capacity. Kazakhstan’s electricity mostly comes from fossil fuels, with coal taking the major share at two-thirds of the total. In the United States, crypto miners argue that their carbon footprint is lower because of the higher proportion of renewable energy sources in the production of electricity.
In 2020, the Kazakhstan parliament passed a law legalizing mining and creating welcoming conditions for the industry. The bill introduced the concept of a “digital asset” and laid the groundwork for licensed cryptocurrency brokers to set up companies. The legislation also established rates for taxes to be collected from miners and new, increased electricity tariffs to begin next January.
Speaking after the bill passed, Digital Development Minister Bagdat Musin told a government meeting that 13 mining farms had already begun operating in Kazakhstan with investments totaling 80 billion tenge ($188 million). By 2025, mining investments would reach 500 billion tenge ($1.2 billion), he said.
Kazakhstan offers an attractive market, with prices per kWh averaging around 5 cents, compared to 9-11 cents in Russia, China, and the United States. At around half price, Kazakhstan’s crypto mining financials look better than its competition.
In August, The9, a Nasdaq-listed Chinese crypto mining company, said it entered an agreement with a local Kazakhstani company to build mining facilities with a total capacity of 200 MW between 2021 and 2022.
Energy Minister Magzum Mirzagaliyev said “We have seen that our country’s electricity consumption has literally increased by 7 percent in one year. That’s a very big increase,
Mirzagaliyev linked the demand to mining and proposed the government limit supplies of electricity to 1 MW per mining farm and to 100 MW for the whole sector. That suggestion drew criticism from miners.
Government officials in Kazakhstan estimate that unregistered crypto miners in the country could be consuming twice as much power as those registered to avoid paying taxes and other fees.
According to Murat Zhurebekov, Kazakhstan’s vice minister of energy, addressing the potential strain on the nation’s power grid “cannot be delayed any longer.” He said officials planned to issue a directive that would limit the power consumption of unregistered miners but did not specify how exactly they could be located.
Kazakhstan energy department would be able to match the increased consumption with a new form of production like renewable energy resources or nuclear energy and as this will take a lot of time to come into reality, till then the energy grid of Kazakhstan should fulfill the new demand by increasing the reliance on coal
Sources:
- https://ccaf.io/cbeci/mining_map – Cambridge bitcoin electricity consumption index (CBECI)
- https://www.gov.kz/memleket/entities/energo?lang=en – Ministry of Energy of the Republic of Kazakhstan
- https://www.the9.com/en/ – Nasdaq listed company
- https://www.kegoc.kz/ – National grid operator Kazakhstan
Harish Kumar
Klever Writer
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