Kazakhstan is facing a serious energy crisis widespread. One of the main reasons? THE bitcoin mining (BTC) and other cryptocurrencies in the country, of course. A new survey of the Financial Times points out that the mass arrival of miners from China after Beijing’s latest crackdowns on activity in the middle of the year have dramatically increased electricity consumption.
First of all, it is necessary to clarify that Kazakhstan was already experiencing power supply problems. While blackouts were uncommon, the nation’s average annual growth in energy expenditure hovered around 2 percent, while the power plant network was not upgraded or expanded. Plus, it’s winter and temperatures are really cold in the country, increasing energy use as people stay indoors longer and heater use soars.
We are talking about a country powered mainly by fossil energy, more specifically by burning coal. Therefore, increasing electricity generation is not such a simple task, as it also requires fuel to be burned. On the other hand, the impact of the arrival of thousands of miners is undeniable in the country, accelerating and showing a crisis that had not yet fully erupted.
Bitcoin mining and the energy crisis in Kazakhstan
According to the Financial Times, Kazakhstan’s electricity demand has increased by about 8% since early 2021, a sharp increase from the 1% or 2% annual growth the country has experienced in recent years. The survey also estimates that more than 87,849 “energy-intensive” cryptocurrency mining facilities have moved from China to Kazakhstan in recent months.
the country now occupies the second place, second only to the United States, as one of the world’s newest leaders in bitcoin mining, according to data from the University of Cambridge.
Last month, three of Kazakhstan’s most important coal-fired thermoelectric plants faced emergency shutdowns. Faced with the interruptions, the country’s Ministry of Energy would start to restrict new mining farms of using more than 100 megawatts (MW) over two years, but then backtracking on that limitation for regulated miners
Kazakh government wants to crack down on illegal miners
But make no mistake, even in the face of an energy problem, Kazakhstan don’t want to repress the activity in the country like China did a few months ago. The Kazakh government understands that cryptocurrency mining is a great opportunity for the country’s economy. Furthermore, the proximity to China and the availability of cheap energy makes the nation a perfect choice for miners.
So the Kazakh authorities made some decisions. To help mitigate power outages, the Kazakhstan Electric Grid Operating Company (KEGOC) has also warned that it will begin rationing energy for government-regulated miners, as reported by the Financial Times.
The problem would not be these facilities, which pay their bills and help the local economy, but the so-called “grey miners”, or miners not regulated by the government of Kazakhstan and who carry out the activity illegally in the country. Experts heard by Financial Times estimate that these facilities are responsible for the consumption of 1.200 megawatts (MW) of the country’s electricity grid.
So, starting next year, the Kazakh government will make legitimate miners pay, both to help distinguish the regulated from the “grey” and to help alleviate energy shortages. Part of the solution is to charge more for legalized installations per kWh consumed.
Xive is a cryptocurrency mining company that concentrates its operations in the southern region of Kazakhstan, the most affected by the energy crisis due to having fewer plants. This was one of the companies that, despite being regulated in the country, was forced to shut down more than 2,500 mining machines by the shortage of electricity.
Iran also faces energy crisis
In addition to Kazakhstan, the Will is another country that also has a system for licensed and unlicensed miners. The Iranian government found itself with no alternatives to ban cryptocurrency mining for four months in May as an attempt to avoid blackouts.
Meanwhile, cryptocurrency miners are migrating en masse to Texas, thanks to cheap energy costs and flexible regulations. However, this US state also faced a blackout recently, so it’s quite possible that an energy problem will also arise for miners there.
With information: The Verge, Financial Times