Due to an increase in cryptocurrency mining activities, some parts of Kazakhstan faced major electricity shortages, according to a report published by The Financial Times. The country’s energy grid was compromised after an exodus of crypto miners from China migrated to the country looking for cheap power costs.
At the start of 2021, Kazakhstan’s demand for electricity had ballooned, recording a sharp increase of about eight per cent versus the usual two per cent consumption. According to research conducted by The Financial Times, approximately 87,849 power-intensive mining equipment was brought to Kazakhstan from China.
Today, the Kazakhstan government claims the second spot next to the United States as one of the largest crypto mining spots in the world, as reported by the University of Cambridge.
After three major power plants in the country faced emergency shutdowns, Kazakhstan Electricity Grid Operating Company (KEGOC) has issued a warning that it would start distributing electric power to 50 registered miners, but they would be the ones to be disconnected first if the energy grid encounters any issue.
In fact, Xive.io, a mining company based in Kazakhstan, has been forced to shut down a crypto mining farm and disassembled 2,500 mining machines since the power outages could not meet the demands of the operations anymore.
‘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’, Xive cofounder Didar Bekbau tweeted.
Several overseas crypto miners have also started witnessing the consequences of Kazakhstan’s power shortages due to crypto mining. Ricky Hoo, a Sydney-based miner who operates 40 mining rigs in the country, has begun transferring his machines to other countries since Kazakhstan’s imposed 12 per cent export tax.
‘Kazakhstan was one of the first places I sent miners to because it had cheap electricity, but all of them are off completely now’, Hoo stated.
To alleviate the worsening energy crisis, Kazakhstan plans to ask Russian energy company Inter RAO to supplement the national power grid. In addition, the Kazakh authorities are planning to charge registered crypto miners a free of 1 Kazakhstan tenge, which is equivalent to $0.0023, for every kilowatt-hour starting 2022.
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