Market

A country without electricity because of Bitcoin miners

A country without electricity because of Bitcoin miners

Many parts of Kazakhstan are suffering from power shortages due to the increase in cryptocurrency mining in the country.

Matthew Heard, a software engineer based in San Jose, expressed concern about his 33 bitcoin miners in Kazakhstan. In the past week, the country has repeatedly turned off the electricity to restrict energy supplies for cryptocurrency miners.

“It has been many days since miners started connecting to the network. But for the past week they’ve been almost inoperative, ”said Matthew.

Electricity shortage because cryptocurrency miners come from China

Kazakhstan is struggling to deal with widespread power shortages caused by cryptocurrency mining in the country. To make matters worse, Bitcoin miners migrated massively from China to the border with Kazakhstan in May.

 

Cryptocurrency mining in Kazakhstan has stalled due to a power outage. Photo: Reuters.

 

Last month, the country’s three largest thermal power plants had to be shut down. Coindesk said that after the incident, the Kazakh energy ministry began preventing cryptocurrency “mining camps” from consuming more than 100 MW of electricity within two years. At the same time, the federal network operations center warned that only 50 state-registered miners should be allocated electricity. Also, when the network has problems, those deals are cut first.

The mining of cryptocurrencies is putting pressure on the Kazakh power grid. As a result, many cities and villages in six regions of the country have been without electricity since October. The country’s energy ministry estimates that electricity demand in the Central Asian country has increased 8% since early 2021 after utilities’ cryptocurrency mining companies migrated from China. Before that, Kazakhstan only increased 1-2% of electricity consumption per year.

According to the Financial Times, at least 87,849 cryptocurrency miners have been relocated from China to Kazakhstan.

Xive.io, a Kazakh company that provides mining equipment to foreign miners, had to close a major hub on November 24th. They dismantled 2,500 mining platforms because there was no electricity to operate.

“Too much work, hope our company doesn’t collapse,” wrote Didar Bekbau, co-founder of Xive.co, on Twitter on November 24th.

The Kazakh authorities believe that a group of “gray miners” (illegal companies) caused electricity shortages in the country. The Department of Energy estimates that these companies have taken 1,200 MW off the grid, more than twice as many as “white miners” (government registered companies).

To make up for the shortfall, crypto miners will have to add 1 Kazakh tenge ($ 0.0023) per kWh. However, until the regulation is in place, Kazakhstan will have to negotiate with Inter RAO, an energy company based in Moscow, Russia, to buy more electricity.

 

“Buying electricity from Russia will certainly solve the problem in the short term. But I think there has to be a big discussion about the energy policy that Kazakhstan is pursuing, ”said Luca Anceschi, Professor of Eurasian Studies at the University of Glasgow (Scotland).

He suggested that the Kazakh government focus on the profits from BTC mining regardless of electricity production capacity. “It is one of the most energy-rich countries in Asia. In theory, there shouldn’t be electricity bottlenecks, “said Anceschi.

Given this situation, some companies have tried to relocate their excavators from Kazakhstan.

“Kazakhstan was the first place I brought the rig because the electricity was cheap. But now the energy was completely lost. I will bring my machines to Russia, ”said Ricky Hoo, an Australian miner who owns 40 cryptocurrency mining machines in Kazakhstan.

Power shortages due to cryptocurrency mining are not unique to Kazakhstan. Iran banned cryptocurrency mining from May to September to prevent the problem of power shortages.

.

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.

Recent Posts

Bitcoin, Ethereum, And Solana Lead Crypto Market, But Not For Long With New AI Altcoin With 30,000% Potential, Expert Says

Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) dominate the crypto market, but experts warn that…

2 hours ago

Dogecoin Price Prediction: Will DOGE Ever Hit $0.7 Again? Why ETFSwap (ETFS) Is The Best Alternative For 100x Gains

Discover the future as the Dogecoin price aims for a $0.7 comeback and discover why…

5 hours ago

Step into BlockDAG’s Presale Frenzy This November: Secure a Massive 100% Bonus with BDAG100!

November is the perfect time for BlockDAG's huge presale. Use BDAG100 to double your purchase.…

7 hours ago

OpenSea New Version Will Be Launched In December

OpenSea new version is scheduled to launch in December, with an improved user experience, improved…

7 hours ago

This website uses cookies.