Cryptocurrency, News, Regulation

Kazakhstan No Longer Crypto Miners Haven After Recent Legislation

Following China’s prohibition on BTC mining, several firms relocated to Kazakhstan. However, shifting restrictions raise concerns about their long-term viability.

Originally, Kazakhstan has been a popular and inviting place for BTC miners. The government projected that 14 full-scale crypto mining facilities would be active inside its borders in 2020. Moreover, government members have made public pronouncements about the millions they expect to pour into the country’s bitcoin mining business daily.

After China banned crypto and mining activities, some reports claim that the BTC hash rate of Kazakhstan increased in three months, rising from around 10% to 22% between June and August 2021 as more miners migrated from China to Central Asia.

Kazakhstan has failed to keep up with the influx of new mining activity. The nation’s government has made some unpleasant modifications to its energy restrictions, limiting the expansion of BTC mining in the country. These regulations curbing new mining operations push numerous miners to start looking for a new place for their business.

Change In Regulation

From being accommodating, Kazakhstan has taken a series of moves in the last eight months that have made mining difficult in the country. Regulatory reforms began in June 2021, after the nation’s leader signed the law that allowed the introduction of taxes to the mining sector. 

Last summer, Kazakhstan had power outages and blackouts in its biggest city, Almaty. According to news sources, the electrical outages were caused by the intense heat and rising demand for air conditioners. However, in September, Kazakhstan Today released a story headlined “Power Shortage Rises In Kazakhstan Owing To Bitcoin Mining. “Though the article may not be the sole reason, the blame for electrical woes centered significantly on BTC mining. 

In October, the country’s Energy Ministry proposed electricity modification limits for miners, including limiting the overall capacity for novel centers to just 100MW. Several mining businesses reported experiencing problems after these modifications. After the incident, BTC miners were now divided into “gray” and “white” miners. Those who stuck to the power limitations were tagged “white,” while those who went above it were “gray.” 

Still, this division did not matter in 2022 after the power situation In Kazakhstan became worse. The power for miners was utterly shut down on the 24th of January till the end of the month. In February, the authorities shut down about 13 illegal BTC mining facilities and promised to do the same to other “gray” miners.

Mining Companies Affected

These crackdowns and electricity shortages in the country have affected many miners, including the big names in the industry such as BIT mining, Canaan, Bitfufu, etc. Most of these companies had plans to expand their business in the country before the power outage and strict legislation shattered them.

The fate of crypto mining in Kazakhstan remains an open question given the recent developments in the country and the rumors of heavy taxation making the news.

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