Cryptocurrency mining in Kazakhstan leads to energy shortage


Cryptocurrency mining consumes a huge amount of energy, which has led to a crisis in Kazakhstan. Financial Times The country’s electric grid operator KEGOC has reportedly said it will start rationing electricity for 50 registered miners after their request prompted an emergency shutdown situation at three power plants in October. The semi-public company said it would also be the first to drop the connection in the event of network failures.

The Department of Energy has estimated that electricity demand has jumped eight percent so far in 2021 for one or two percent more than usual. There have been blackouts in six districts since October.

Officials and observers have commented the blackout on the rising numbers of unregistered crypto-miners illegally generating currency from their homes or even factories. China’s war against cryptocurrencies may be partly to blame. Energy demand began to rise when mining companies moved out of China in early 2021, and jumped again when China made mining illegal in May. Electricity was relatively inexpensive in Kazakhstan, making it a haven for companies hoping to make even bigger profits from cryptocurrencies.

Kazakhstan is trying to make up for the energy shortage. It is asking a Russian energy company to complete the national electricity grid, and will charge registered miners a compensation fee of 1 tenge (about $0.0023) per kilowatt-hour starting in 2022. However, both efforts will take time, and this forces the miners to either scale back or moving equipment.

There are also concerns that the government is not being honest about its problems. Luca Ancchi of the University of Glasgow has argued times That Kazakhstan was a scapegoat for miners due to the reliability problems of the country’s electrical grid. Whether or not this is true, it is safe to say that the demand for mining hints at potential problems for other countries if domestic crypto production takes off.

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