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Kazakhstan crypto activities bust amidst power shortages

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During China’s crypto crackdown last September 2021, crypto miners sought refuge in other countries such as Kazakhstan in Central Asia. However, current power supply shortages cut the country’s potential to become a mining hub for crypto transactions. 

What was once a booming mining hub for Bitcoin and other crypto assets now busts amidst the electrical regulatory rules imposed by the government. 

‘There’s zero potential for Bitcoin mining at the moment in Kazakhstan’, said Almas Chukin, a partner at Almaty-based equity firm called Visor Kazakhstan, to Bloomberg.

The shortages caused by crypto mining companies operating in Kazakhstan forced the government to cap the power allocated to the industry in October 2021 by 100 megawatts (MW). This caused problems to mining operations and stunted the growth of crypto in the country. 

Xive, a crypto mining firm, decided to shut down one of the data centres after the power was cut off last November. According to its founder, Didar Bekbauov, the company is considering moving all of its operations to the United States (US).

BitFuFu, another crypto company, was forced to turn off its mining rigs and left all of them in Kazakhstan to seek refuge in the US. 

Roughly 5% of the country’s energy supply was drained by the 50 registered crypto mining data centres in Kazakhstan. However, the power grid was not able to meet the demands of these operations as well as the rising electricity demands from the nation.

According to Bekbauov’s statement to Bloomberg, miners in Kazakhstan are very unhappy now with the turn of events. 

‘They’re trying to make mining a scapegoat, telling everyone that because of miners there was a super load of electricity’, he said. 

Kazakhstan turns to nuclear energy

Amidst the issues of power shortages, the Kazakhstan government mulls the idea of reviving nuclear energy plans to help provide for the booming electricity demand. 

Energy Minister Magzum Mirzagaliev revealed that two locations are now being considered as potential sites for nuclear stations. These include a village called Ulken located in the Alma-Ata region and a city in Eastern Kazakhstan.

‘We have created a projection of the nation’s production and consumption of electricity until 2035. We clearly see the need to build a nuclear power plant in order to provide electricity to our population and our economy,’ said Mirzgaliev.

The country is accepting of the crypto industry, welcoming miners after the crackdown in China. An estimate of US$1.5 billion is said to be contributed by the mining operations in the next 5 years with an additional US$300 million for tax revenue. 

Although the plans can help with the growing demand for electricity in the country, Mirzagaliev warned that the plans to create these nuclear power plants will take up to 10 years to finish. 

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