Authorities in Kazakhstan have calculated the energy used in the country’s crypto mining industry which competes for electricity with other sectors of the economy and households. The government has also estimated the additional supply necessary to meet the growing demand from mining farms and proposed a cap on the nominal capacity of new facilities.
Kazakhstan measures energy consumption in crypto mining sector, estimates deficit
In order to explain why Kazakhstan is considering placing restrictions on new cryptocurrency mining operations, the Energy Ministry told local media that data centers that mint digital coins use 5 megawatts ( MW) of electricity per hour. A single mining facility burns an average of 3.6 million kilowatts (kW) per month, the department said, noting that this amount is equivalent to the consumption of 24,000 homes.
As China cracked down on cryptocurrency miners this year, the Central Asian nation has become an attractive destination for many mining companies with its low energy tariffs. As a result, electricity consumption rose 7.4% in the first nine months of this year, reaching nearly 83 billion kilowatt-hours (kWh), according to government figures.
Nur-Sultan officials have already blamed the peak on around 50 mining farms operating in the country. With a total project capacity of over 972 MW, their current load on Kazakhstan’s electricity distribution network has been estimated to be over 693 MW.
In addition to this, the consumption of electricity by illegal mining facilities is likely to have increased as well. The Energy Department told business news portal LS that the growth in excess consumption, which can be attributed to mining centers, is around 1,050 MW, while the share of underground crypto miners is believed to be between 250 and 450 MW.
The government wants to limit the capacity of new mining farms to 100 MW
Meeting the growing needs of the mining industry would require an increase in electricity production of at least 1,000 MW, which can occur over the next four to five years, the ministry noted. In early October, Kazakhstan’s Energy Minister Magzum Mirzagaliev said the government intended to build power plants with a combined capacity of 3,000 MW during the same period.
To prevent the situation from deteriorating, the ministry recommends a capacity limit of 100 megawatts for new consumers connected to the electricity grid. The measure is expected to affect plans to build crypto mining farms in the country.
This isn’t the only bad news for cryptocurrency miners and potential investors. This month, lawmakers presented a proposal to introduce the registration of mining entities operating in the country. Concerned about the sector’s growing energy consumption, a group of Mazhilis MPs also called for the adoption of higher electricity tariffs for companies involved in mining digital currencies.
Do you expect Kazakhstan to limit the size of crypto farms and introduce other restrictions and tariffs for the coin mining industry? Tell us in the comments section below.
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