Kazakhstan faces a power crisis and cryptocurrency mining has been identified as the main culprit. In the ongoing crackdown in China, the Central Asian country has become a magnet for crypto miners who are taking advantage of its low power rates.
The demand for electricity in the Republic of Kazakhstan has increased by 7% due to crypto mining
Kazakhstan plans to increase its power generation capacity in the coming years but at the moment the country is experiencing power shortages. In 2021, costs increased 7% compared to last year, a government official revealed at a news conference.
Referring to the numbers released by grid operator, KGOC, Energy Minister Magzum Mirzagaliv told local media this week that demand has increased due to the growing number of data centers dedicated to cryptocurrency mining. “It’s a huge increase,” he said.
We have to make several decisions. First, we must ensure that system operators initially have the right to limit or reduce the cost of mining data centers when power shortages may occur.
Mirzagaliyev was quoted by Kazakhstan Today as saying in his report that crypto mining activities do not now have a significant positive impact on socio-economic indicators. The mine consumes cheap electricity produced in Kazakhstan, competing with the rest of the economy and the growing demand of the population. Minted cryptocurrencies are usually sold elsewhere and profits are deposited abroad.
Nevertheless, the head of the Ministry of Energy stressed that Kazakhstan needs to develop its crypto mining sector and expressed confidence that the industry would grow. Mirzagaliyev noted that there are “very good opportunities” for this, highlighting the possibility of expanding the country’s use of renewable energy.
In light of the current shortage, the department has prepared several proposals to address the power shortage caused by the miners. This includes limiting the power consumption of existing mining data centers and suspending the connection of new crypto firms to the grid.
At the same time, the Nur-Sultan government will focus on increasing power generation. Minister Mirzagaliyev said the country wants to jointly build a 3,000-megawatt power plant in the next five years. Although these power stations will operate on natural gas, Kazakhstan will also introduce new facilities depending on renewable energy sources. Their share of the country’s energy mix is expected to reach 6% by 2025 and at least 15% by 2030.
A study published by Cambridge University this year found that the country has increased its global bitcoin issuance sixfold in less than two years. Kazakhstan now ranks third in the world by crypto mining volume. In July, the government decided to introduce a surcharge for electricity used by mining, but it did not stop the flow of mining companies.
Do you expect Kazakhstan to successfully address its power supply shortages and attract cryptocurrency mines? Tell us in the comments section below.
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