Kazakhstan

Kazakhstan power restrictions to affect crypto mining

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Kazakhstan once encouraged bitcoin miners to set up shop in the Central Asian nation offering subsidies and tax incentives, but now in the midst of an energy crisis, it’s looking to put a cap on the industry’s growth, local media report.

Data from the Cambridge Bitcoin Electricity Consumption Index shows that Kazakhstan’s global share of cryptocurrency processing power has increased significantly, with the country commanding approximately 18% of the global hashrate, up from 8% earlier this year.

And according to the Blockchain and Data Center Industry Association’s estimations, as many as 250,000 mining devices are hosted in Kazakhstan today.

KEGOC, the state power utility, reported on Oct. 5 that growth in power consumption is up 11.8% during the first nine months of the year. In peak hours, power consumption exceeds last year’s values ​​by more than 1000-1500 MW, roughly the energy used by an entire province.

Energy Minister Magzum Mirzagaliev told local media this month, citing figures released by KEGOC , that the increase in demand is largely due to an increasing number of data centers devoted to cryptocurrency mining-the series of electricity-hungry calculations made by networked computers to verify and record cryptocurrency transactions.

A bill enacted by the country’s legislature, put forward by its Energy Minister, orders the total power for electrical installations of consumers engaged in digital mining activities should not exceed 100 MW with each individual site limited to 1 MW.

Kazakhstan Crypto Miners Share
(Source: Cambridge Center for Alternative Finance)

“To prevent an accident and minimize the consequences of a decrease in generation in the power system, KEGOC, in coordination with the Ministry of Energy of the Republic of Kazakhstan, together with regional power grid companies, limited the consumption of electricity by consumers carrying out excess consumption. The restrictions were introduced according to the schedules agreed with the local executive bodies” KEGOC said in a statement on Oct. 14.

And today (Oct. 20) KEGOC clarified: “To mitigate the risk of load shedding in case of drop in generation by Kazakhstan power plants, the Ministry of Energy jointly with KEGOC developed regulatory measures that shall help satisfying the electricity and capacity demand of consumers. The measures require that power plants in case of a failure provided for mandatory replacement of the failed generation to eliminate the risk of load shedding (effective since the end of October 2021). These regulations are intended to protect consumers from load shedding due to power plant failures. It shall also stimulate better repairs at the plants. If the above measure are not sufficient and further load shedding will be necessary, the amendments to the national regulations require the digital mining load be disconnected first.”

According to recent amendments of Kazakhstan’s Tax Code, beginning in January 2022, crypto miners will have to pay one additional tenge (0.23 cents) per kWh, allowing for the government to receive more taxes from cryptocurrency mining.