Kazakhstan has become a magnet for crypto miners since the Chinese crackdown on cryptocurrencies, and crypto miners began. Miners have been attracted to the central Asian country thanks to its low electricity charges.
However, with miners swarming to the country, the country is facing a power crisis, with the government blaming crypto miners for the ongoing crisis.
A Surge In Demand
Kazakhstan has seen a surge of over 7% in demand for electricity, thanks to the influx of cryptocurrency miners. At the same time, the country is planning to boost its power capacity over the next few years. However, in the short term, the country has seen a surge of 7% when compared to the power consumption over the previous year.
The spike has been attributed to a growth in the number of data centers set up for cryptocurrency miners. Kazakhstan’s energy minister Magzum Mirzagaliev, while speaking to the local media, referred to the increase in demand stated,
“This is a very big increase...We need to make a number of decisions. First, we must be able to ensure that system operators have the right to limit or reduce the consumption primarily of mining data centers at a time when there may be a shortage of electricity.”
Crypto Miners Having A Negative Impact
The energy minister was quoted by Kazakhstan Today, which stated in its report that cryptocurrency miners are currently not having a significant positive impact on socio-economic indicators. Mining has been significantly consuming electricity and is competing with the growing needs of Kazakhstan’s economy and its population.
Developing The Crypto Mining Sector
The minister, however, insisted that Kazakhstan needed to develop its crypto mining sector while also expressing complete confidence in the industry to evolve to meet the growing demands of the sector. He also pointed out that there are significant opportunities to develop the crypto mining sector and highlighted the country’s potential when it comes to renewable energy.
Restrictions On Miners And Solutions
However, to address the ongoing deficit, the Ministry of Energy has come up with a slew of proposals to deal with the power shortages caused by miners. The restrictions include putting a limit to the amount of electricity that data centers related to crypto mining in public while also suspending any new data centers or crypto farms from connecting to the country’s electricity grid.
The government has also announced that it would focus on increasing its annual electricity production. The energy minister revealed plans to build power plants and increase capacity by 3000 megawatts over the next five years. The new electric stations will be operating on natural gas, while the country also focuses on creating new power production facilities that will use renewable energy sources. The share of renewable energy in the country’s power grid is projected to reach 6% by 2025 and 15% by 2030.
A Cambridge study has also shown that Kazakhstan has seen a significant increase in its share of Bitcoin, with the cryptocurrency seeing a six-fold increase in less than two years. Kazakhstan is third in the world when it comes to crypto mining volume. The government has also introduced a surcharge for miners utilizing electricity. However, that has not stopped the continuous influx of miners into the country.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.