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On Tuesday, Kazakhstan's Financial Monitoring Agency claimed that it confiscated crypto mining equipment valued at nearly $200 million, as the former Soviet republic moved to tighten its grip on the growing crypto mining sector.

Since China’s ban on crypto last year, Kazakhstan has emerged as the world’s number two destination for Bitcoin mining, behind only the United States. The exodus of miners from China resulted in Kazakhstan absorbing almost 88,000 mining machines.

It is estimated that cryptocurrency mining revenues in Kazakhstan may soar to $1.5 billion in the next five years.

However, recent political turbulence and power cuts have marred the ability of the Central Asian republic to deliver its promise of a mining haven for crypto enthusiasts.

This week, the government shut down 55 crypto mining firms, while flagging 25 mining operations as illegal and forcing an additional 51 to halt operations, according to the Financial Monitoring Agency. 

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Although Kazakhstan has not banned crypto mining, the country began levying steeper and steeper taxes on crypto miners last year due to worsening energy shortages. 

Last June, the country adopted a new electricity surcharge for crypto mining, with miners facing an extra charge of 1 tenge per kilowatt-hour of electricity, equivalent to $0.0019.

During harsh winter months, however, the government has shut off miners’ access to electricity altogether to conserve power. “From 6 p.m. to 11 p.m.—[the power providers] sometimes cut off electricity to our mining farms,” Didar Bekbauov, founder of mining colocation company Xive, told Wired.

"For around a month, all of the large centers were shut off,” one mining consultant told The Block. “Now they are turning them back on again."

Kazakhstan’s crypto miners guzzle up to 8% of the country’s total power generation capacity, according to Reuters. Kazakhstan’s power grid is also heavily invested in coal, requiring many mining projects to run on fossil fuels instead of renewables.

A large number of crypto miners remain unregistered with the government, operating out of deserted factories and basements, and use twice the electricity of licensed miners. The government has placed them on a gray list and targeted them with stringent fines, though it’s not clear how the government locates and fines underground miners.