The migration of bitcoin miners workers of China in Kazakhstan has caused an enormous crisis in Kazakhstan’s power grid mining operations using large amounts of energy.
An 8% rise in consumption
Kazakhstan experienced a substantial 8percent increase in its consumption of electricity in 2021. This increase was explained by the surge of Bitcoin miners from China. According to figures provided by The Financial Times, Kazakhstan received 87.849 Bitcoin mining rigs from Chinese firms during the last year. This comes after China’s enforcement of cryptocurrency laws and it is possible to see an increase in the amount.
The rising demand has led to a huge shortage in the power grid which has led to an uneven energy supply and insecure electric services, causing more difficulties confronted by the local population.
The nuclear solution
During his meeting with bankers on November 19, the president of Kazakhstan put forward the idea of a nuclear power plant to address the stress currently placed on the country’s electricity infrastructure. In a meeting with bankers, the President said,
“Looking ahead, we will have to make an unpopular decision on building a nuclear power plant.”
Nuclear power is still a controversial topic in Kazakhstan and the nation’s sole nuclear power plant shutting its doors in the year 1999. Even though Kazakhstan produces 41 percent of the world’s uranium, people are skeptical of nuclear power following many years of nuclear weapons testing in the Soviet Union.
Despite the distress of the population, President Tokayev remains enthusiastic about a nuclear solution and even suggested a referendum on the issue a couple of years ago. At a Russian business forum, Tokayev stated:
“I myself believe it is time to consider this problem substantially since Kazakhstan needs a nuclear power plant.”
The risk of compromising tax revenue
Although President Takoyev has not connected the nuclear power plant he proposed with Bitcoin miners or other mining operations Takoyev is aware that in the event that Kazakhstan is unable to maintain Bitcoin miners within the country they could be at risk of losing approximately 158 billion. dollars of tax revenue created from mining operations.
The power shortage is already beginning to show its effects and the main Bitcoin Xive market closing its operations in Kazakhstan. In an update on Twitter, Xive co-founder Didar Bekbau stated that he has decided to stop the mining operation in Kazakhstan because of being unable to access the “limited supply of electricity from the power grid”.
The most important Bitcoin mining hotspot
Kazakhstan experienced a huge increase in miners coming from China and as a consequence, the country’s hash rate quadrupled to nearly 18%. Kazakhstan was ranked as the second-largest Bitcoin mining region globally in August, a position that was surpassed by only the United States of America, which is responsible for more than 35 percent of the entire world’s BTC mining activity.
However, Kazakhstan also faced several challenges as it tried to live up to its position as the world’s second-largest center for Bitcoin mining operations. On October 1, Kazakhstan’s biggest coal-fired power plant shut down in a tense moment, with Kazakhstan Electricity Grid Operating Company (KEOC) blaming Bitcoin mining companies for the downtime.
However, from 2022, BTC miners in Kazakhstan will have to pay an energy premium, with the new tax adding one Kazakh tenge per kilowatt hour consumed.