Kazakhstan’s cryptocurrency mining industry was initially driven by China’s tightening of digital asset regulation.
But after some seven months, it turns out that miners based in Kazakhstan are saturated power shortages. Some miners report that they are close to bankruptcy due to the inability of the national network to supply consistent electricity.
Just when the country was emerging as a significant global hub for cryptocurrency mining, it seems like things are heading south as miners start to leave.
Kazakhstan initially benefited from a ban on cryptocurrencies in China
China banned financial institutions from engaging in crypto transactions in May this year. In the months that followed, Chinese authorities became increasingly stubborn on the issue.
In September, a statement from National Bank of China (PBoC) said all crypto activities are now illegal.
As expected, people are circumventing the rules, for example, by turning to DEX and P2P exchanges. And in some cases the continued use of cryptocurrencies via VPN and foreign registered data.
In response, the PBoC promised to break all loopholes, including labeling the use of foreign exchanges as “illegal financial activities.” They say this is it justified because digital currency “threatens the security of people’s property”.
Foreign currency exchanges that use the Internet to provide services to local residents are also considered illegal financial activity.
The consequence of all this is a big slowdown in crypto activity in China, mostly in the decline of the hashrate of mining coming from China.
Data from the Cambridge Bitcoin Electricity Consumption Index show a significant drop in the bitcoin hashrate from China in May. At the same time, Kazakhstan’s hashrate rose from 11.9 Eh / s in May, almost doubling to 21.9 Eh / s in August.
Part of the reason for that was Kazakh government encouraging crypto mining through the recognition of legislative activities and the provision of tax incentives to miners.
It also helps the country enjoy some of it lowest electricity prices globally, it costs $ 0.041 per kWh for households.
Soviet-era power infrastructure is not zero
As soon as the cryptocurrency miners established a base in Kazakhstan, the obsolete electricity grid in the Soviet-era country felt a strain. Residents blame power outages directly for the presence of miners in the country.
Founder of Xive, a cryptocurrency mining company operating in the region, Didar Bekbauov, He said:
“They did mining [a] sacrificial lamb. ”
Bekbauov added that Xive closed one of its mining farms in southern Kazakhstan after a power outage in November. While the company still operates another plant in the country, he is considering closing all operations and relocating to the US
Similarly, this month Bitmain, which supports Bitmain, suspended its business in Kazakhstan to establish in the US
Kazakhstan’s Electricity Management Company (KEGOC) said it was forced to cut off electricity supplies due to unplanned repairs.
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