Kazakhstan is facing electricity shortages and cryptocurrency mining has been identified as the main culprit. Amid the ongoing crackdown in China, the Central Asian country has become a magnet for crypto miners who are taking advantage of low electricity prices.
Kazakhstan sees 7% increase in electricity demand due to crypto miners
Kazakhstan plans to boost its power generation capabilities in the coming years, but the country is now experiencing electricity shortages. A government official revealed at a press conference that consumption in 2021 will increase by 7% compared to last year.
The surge in demand is largely due to the growing number of data centers dedicated to cryptocurrency mining, Energy Minister Magzum Mirzagaliyev told local media this week, referring to figures released by network operator KEGOC. Emphasizing that “this is a very large increase,” he said:
We need to make a number of decisions. First, we must be able to ensure that system operators have the right to essentially limit or reduce the consumption of mining data centers at a time when there may be electricity shortages.
“Kazakhstan Today” newspaper quoted Mirzagaliyev’s statement, which noted in its report that the activities of crypto miners now do not have a significant positive impact on socio-economic indicators. Mining consumes the cheap electricity generated in Kazakhstan, rivaling the growing needs of the rest of the economy and population. The minted cryptocurrency is usually sold elsewhere and the profits are accumulated abroad.
However, the head of the Ministry of Energy insisted that Kazakhstan needs to develop the crypto-mining sector, and expressed confidence that the industry will develop. Mirzagaliyev noted that there are “very good opportunities” for this, highlighting the country’s potential to expand the use of renewable energy.
However, in light of the current shortfall, the department has prepared a number of proposals on how to deal with the energy shortage caused by the miners. These include measures to reduce the electricity consumption of existing mining data centers and suspend the connection of new crypto farms to the network.
At the same time, the Nur-Sultan government will focus on increasing electricity production. Minister Mirzagaliyev revealed that the country intends to build power plants with a combined capacity of 3000 MW in the next five years. While these electric plants will run on natural gas, Kazakhstan will also launch new facilities based on renewable energy sources. Its share in the country’s energy mix is expected to reach 6% by 2025 and at least 15% in 2030.
A study released by the University of Cambridge this year showed that the country has seen its share of global bitcoin mining increase sixfold in less than two years. Kazakhstan now ranks third in the world by volume of crypto mining. In July, the government decided to impose additional fees on electricity used by miners, but that did not stop the flow of miners.
Do you expect Kazakhstan to successfully deal with its energy supply deficit and continue to attract cryptocurrency miners? Tell us in the comments section below.
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