Kazakhstan faces power shortages, and cryptocurrency mining has been identified as the main culprit. Amid an ongoing crackdown in China, the Central Asian nation has become a magnet for crypto miners who profit from its low electricity tariffs.
Republic of Kazakhstan sees electricity demand increase by 7% due to crypto miners
Kazakhstan plans to increase its power generation capacity in the coming years, but the country is currently experiencing power shortages. In 2021, consumption jumped 7% from last year, a government official revealed at a press conference.
The surge in demand is largely due to the growing number of data centers dedicated to mining cryptocurrency, Energy Minister Magzum Mirzagaliev told local media this week, referring to figures released by the network operator, KEGOC. Stressing that “this is a very big increase”, he said:
We have to make a number of decisions. First, we need to be able to ensure that system operators have the right to limit or reduce consumption primarily from mining data centers at a time when there may be a power shortage.
Mirzagaliev’s statement was quoted by Kazakhstan Today which noted in its report that the activities of crypto miners now do not have a significant positive impact on socio-economic indicators. Mining consumes the cheap electricity produced in Kazakhstan, competing with the growing needs of the rest of the economy and the population. The minted cryptocurrency is usually sold elsewhere, and the profits are accrued abroad.
Nonetheless, the head of the Energy Ministry insisted that Kazakhstan needed to develop its crypto mining sector and expressed confidence in the evolution of the industry. Mirzagaliev stressed that there are “very good opportunities” for this, highlighting the country’s potential to expand the use of renewable energy.
In light of the current deficit, however, the ministry has prepared a number of proposals on how to deal with power shortages caused by miners. These include measures to limit the electricity consumption of existing mining data centers and to suspend the connection of new crypto farms to the network.
At the same time, the government of Nur-Sultan will focus on increasing the production of electricity. Minister Mirzagaliev revealed that the country intends to build power plants with a combined capacity of 3,000 megawatts over the next five years. While these power plants will run on natural gas, Kazakhstan will also launch new facilities based on renewable energy sources. Their share in the country’s energy mix is expected to reach 6% by 2025 and at least 15% by 2030.
A study published by the University of Cambridge this year showed that the country has seen its share in global bitcoin mining increase sixfold in less than two years. Kazakhstan now ranks third in the world in terms of crypto mining volume. In July, the government decided to introduce a surcharge for electricity used by miners, but that did not stop the influx of mining companies.
Do you expect Kazakhstan to successfully solve its power supply deficit and continue to attract cryptocurrency miners? Tell us in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, nor a recommendation or endorsement of any product, service or business. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, good or service mentioned in this article.