Migrated Crypto Miners Strain Kazakhstan’s Energy Supply

Kazakhstan is the second-largest contributor to the Bitcoin hash rate. However, the country’s energy grid may be unprepared to handle the addition of many cryptocurrency miners from China and others looking to capitalize on low-cost electricity.

According to Reuters report, Kazakhstan’s government officials 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. All crypto miners in Kazakhstan might be using as much as 1.2 gigawatts, or roughly 8% of the country’s total power generation capacity.

Murat Zhurebekov, Kazakhstan’s vice minister of energy, said that the potential strain on the nation’s power grid “cannot be delayed any longer.” According to him, 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.

As the crypto miners were chased out of China following a government crackdown in the country, both Kazakhstan and the United States have become the leading countries responsible for the largest contributions to the Bitcoin (BTC) hashing power. Major mining pools, including BTC.com and firms like Canaan, have set up shop across the border.

Earlier in June this year, President Kassym-Jomart Tokayev signed legislation imposing additional taxes on the energy used by crypto miners legally operating in Kazakhstan. The law would reportedly introduce an additional $0.00233 fee per kilowatt-hour, and is scheduled to start in January 2022.

Cambridge Centre for Alternative Finance data reveals that Kazakhstan generated more than 18% of the average monthly hash rate share for the BTC network as of July, with the U.S. contributing more than 35%. Some estimates put cryptocurrency mining revenue in Kazakhstan at $1.5 billion over the next five years.