Kazakhstan

Kazakhstan could turn to nuclear power to keep its Bitcoin mining industry running


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As per Nikkei Asia, Kazakhstan’s president Kassym-Jomart Tokayev has suggested building a nuclear plant to sustain Bitcoin mining in a bid to support the profitable crypto mining activities in the nation 

“Looking into the future, we will have to make an unpopular decision about the construction of a nuclear power plant,” said Tokayev in a bankers meeting held in Almaty last Friday.

Tokayev first discussed the idea of building a nuclear power plant with Russia’s President Vladimir Putin in April 2019. However, the idea could not be acknowledged following the heavy criticism that it received back then. 

The critics were quick to respond, referring to the nuclear plant idea as an “ecological disaster” in the making. Despite growing unease among Kazakh’s citizens, President Tokayev is keen on pursuing the idea and have addressed the apprehension of citizens regarding constructing a nuclear plant as “inappropriate” 

Kazakhstan’s looming power crisis

Kazakhstan boasts low-cost electricity prices that have transformed the country into a popular crypto mining spot. When China imposed a heavy crackdown on Bitcoin mining activities in its country, a large group of ousted miners took refuge in Kazakhstan, where they could mine crypto without excessive government intervention and could make use of its easily accessible and cheap electricity to mine Bitcoin. 

To fuel the growing demand for Bitcoin mining, the country’s energy supply had to double over to accommodate such a large influx of crypto miners.  

According to Cambridge Bitcoin Electricity Consumption Index’s IP data, Kazakhstan controls approximately 35% of Bitcoin mining power, which is second to that of the United States. 

Due to this sudden increase in crypto mining activities in Kazakhstan, the nation is now facing a heavy power crisis where its citizens are now experiencing frequent power outbreaks. 

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Kazakhstan struggles to accommodate new Bitcoin miners amid energy crisis


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Following a harsh clampdown imposed by China on Bitcoin-related transactions, the exiled miners from China found refuge in Kazakhstan to mine Bitcoin without excessive government intervention. The country’s cheap electricity supply has made Kazakhstan a popular choice for miners to mine Bitcoin, however, the recent development has propelled the country to reconsider its newly acquired title.

But Kazakhstan is now fighting a rising energy crisis, as increased Bitcoin mining activity has compelled miners to make excessive use of the city’s cheapest electric supply which is now depleting at a visibly faster rate.

The feud between registered and “grey” miners

Kazakhstan’s energy minister Magzum Mirzagaliyev has assured crypto miners that the regulated crypto operations will not be hampered at any cost. However, the “grey miners” or the ones who are not registered with the government may soon be left with limited choices that include either leaving the region for good or getting themselves registered as legal crypto miners.

Bitcoin Mining is an extensive process that includes solving complex computational algorithms to create new Bitcoin. The process is necessary to maintain a standardized directory or a ledger to record each transaction systematically. The process involves heavy energy consumption that uses almost 91 terawatt-hours of electricity annually, which is 0.5% of the world’s total electricity supply.

The country boasts some of the cheapest electricity prices, almost half the rates of that in the US. The reduced prices and rates make Kazakhstan an ideal place to mine Bitcoin.

However, with the sudden influx of miners from China, the country is facing a brewing energy crisis as it relies heavily on coal to produce electricity, and the excessive pressure on natural resources is emptying the country’s coal reserves faster than ever.

Kazakh authorities estimate that crypto mining utilizes approximately 8% of the country’s electric supply, which is adding distress to the country’s natural energy reserves.

Moreover, the National Association of Blockchain and Data Center on Tuesday has called for a solution that includes going after the grey miners and encouraging them to abide by the crypto laws and legally practice bitcoin mining.

“While many illegal miners have set up operations in recent months, many Bitcoin mining companies have been operating in the country for many years who fully comply with all laws, pay their taxes, and provide local jobs,” said association president Alan Dorjiyev in a statement.

He further stated that the association is actively collaborating with both the Ministry of Energy and Ministry of Digital Development to “create a fair and transparent market where those who follow the rules can operate while those who do not will be forced out of business.”

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