Cryptocurrency miners in Kazakhstan are facing a widespread electricity shortage amid a surge in mining, as reported by the Financial times. Kazakhstan has been grappling with an overloaded power grid as miners arrive from China, which cracking down on cryptocurrencies earlier this year and cryptocurrency-based transactions prohibited in September.
According to the Financial timesKazakhstan's electricity demand has increased by around eight percent since early 2021, a sharp rise from the one to two percent annual growth the country typically experiences. the Financial Times' investigate it also estimates that more than 87,849 "energy intensive" mining rigs have made their way from China to Kazakhstan. The country is now ranked number two, just behind the US, as one of the most popular cryptocurrency mining spots, according to data from Cambridge University.
Just last month, three of the largest coal-fired power plants in Kazakhstan faced emergency stops. In light of the interruptions, Coindesk reports that the country's Ministry of Energy would begin restricting the use of more than 100 megawatts (MW) to new mining farms over the course of two years, but later I walked back to this limitation for legal miners.
To help mitigate power outages, the Kazakhstan Electricity Network Operator Company (KEGOC) also warned that it will begin rationing power to 50 government-registered crypto miners, as noted by the Financial times. Kazakh officials reportedly attribute the power crisis to a rise in "gray miners," also known as unregistered miners, illegally mining crypto. Experts estimate that these miners are responsible for consuming 1,200 megawatts (MW) from the country's electricity grid (via Financial times).
Starting in 2022, Kazakhstan will start making legitimate miners pay, both to help distinguish registered miners from the "gray" ones, and to help alleviate power shortages. The country plans charge legitimate miners 1 Kazakhstan tenge ($ 0.0023) per kWh. But for now, Kazakhstan may have to rely on Russian energy company Inter RAO, which came to an agreement with earlier this month, to provide an extra boost of energy during the cold winter months.
A little sad to close our mining farm in the south of KZ. The last container is ready to be shipped. So much work, people, hopes are ruined. Country risk played pic.twitter.com/J8ZMg6GeUI
- Didar (@didar_bekbau) November 24, 2021
The southern part of Kazakhstan has been particularly affected by shortages, as Coindesk notes that this part of the country has few power plants, and the main grid sometimes struggles to deliver power to the region. Kazakhstan-based crypto firm Xive, which provides space and power for clients' mining rigs, was recently forced to shut down more than 2,500 mining machines due to power shortages. Didar Bekbau, a co-founder of the company, tweeted a video of mining rigs loaded into the back of a truck. "It's kind of sad to close our mining farm in the south [Kazakhstan]โBekbau writes. "So much work, people, hopes are ruined."
Energy problems related to cryptocurrencies they are not just limited to Kazakhstan. Iran, which also has a system for licensed and unlicensed miners, cryptocurrency mining banned for four months in May as an attempt to avoid blackouts. Meanwhile, crypto miners are migrating to Texas in droves, thanks to its low energy costs and lax regulations. Experts expect electricity demand to exceed 5,000 MW, which is especially concerning as Texas experienced a major power outage own earlier this year.
