Bitcoin boom forces Kazakhstan to act: Black miners threaten power supply

Extremely low electricity prices and the geographical proximity to China have made Kazakhstan the world’s number 2 in crypto mining within three months. This poses increasing problems for the country with its 19 million inhabitants.

The Kazakh government notices that energy consumption in the country has increased rapidly. It has long since ceased to be covered by the country’s outdated coal-fired power plants. In order not to let the energy imports from outside get out of hand, the first rationing measures are taking effect in the country.

The country’s energy ministry sees an urgent need for action and wants to deal with the miner problem as quickly as possible. Because according to official figures, crypto miners consume up to 1.2 gigawatts of electricity and thus around eight percent of the total electricity output.

The problem is exacerbated by the fact that unregistered, so to speak “black” miners would noticeably consume about twice as much electricity as those who officially registered their crypto company.

First of all, Energy Minister Murat Zhurebekov wants to issue an ordinance that, on the one hand, is intended to force crypto miners to properly register their company. On the other hand, it should form the legal basis to be able to switch off the electricity to unregistered miners. This regulation should be implemented before the end of the year, promises Zhurebekow: “Because this matter can no longer be postponed”.

The biggest difficulty in shutting down unregistered miners is having to locate them first. Findings so far show that they often operate from basements and abandoned factory buildings. Kazakhstan wants to use aerial reconnaissance to search for heat signatures.

Miners who register will be allowed to continue operating in the country, but will be charged in addition to a kind of energy tax that will be levied from the beginning of 2022 in the order of 0.0023 US dollars per kilowatt hour.

Of course, Kazakhstan would also have a much simpler alternative. Like the data from GlobalPetrolPrices show, the average kilowatt hour in Kazakhstan costs just $ 0.054, while the average in the rest of the world is $ 0.124 – Germany at the top of the price range at 0.371.

A price increase should clearly deter Kazakh miners. But that would be just as little in the interests of the government. After all, Kazakhstan’s National Association for Data Centers and Blockchain (NABDC) recently estimated that crypto mining could generate $ 1.5 billion in revenue over the next five years. It therefore makes sense to exercise a certain amount of tact when dealing with crypto miners.