Kazakhstan Energy Ministry halts illicit crypto mining operations in the country

Kazakhstan’s Ministry of Energy has made an official announcement of having discovered 13 illegal cryptocurrency mining operations, and is coordinating procedures for terminating their licenses.

The government has ordered executing the shutdown of these 13 mining operations as a part of its efforts to regulate the Bitcoin mining sector that has been getting increasingly popular in the recent years.

According to the official statement, the miners had been using a lot of energy, the total power consumption amounting to 202 megawatts. As per the Kazakh government, efforts of identifying and disconnecting mining farms from the electrical networks would continue, and following the discovery of other illicit mining operations, authorized bodies would initiate operational and investigatory actions against them.

As Kazakhstan is emerging as the second-largest Bitcoin producer following the Chinese government’s crypto crackdown, the overall power consumption in Kazakhstan has skyrocketed. A report by Cointelegraph had stated that the Republic of Kazakhstan houses over 18 percent of the world’s Bitcoin hash rate as recorded in August 2021. The figure is trailing only the United States, whereas the percentage in April 2021, i.e., before China’s crypto mining crackdowns, was only 8 percent.

In June 2021, the president of Kazakhstan had approved the creation of a tax category, particularly for Bitcoin mining, motivated by the Chinese government’s anti-Bitcoin attitude. Due to the Chinese government’s hostility, China’s Bitcoin mining businesses, including Canaan and BTC.com, had relocated to Kazakhstan.

Although the mining industry has been operating in the country for some time now, it appears to have lost its hash rate share owing to various reasons, several sector executives feel; thus causing Kazakhstan to depart from the world’s top three Bitcoin mining countries in the index update which is expected next month.

On February 8, the Kazakh president had ordered a cabinet-level investigation of cryptocurrency mining in the country, wherein Kazakh First Vice Minister of Finance Marat Sultangaziyev had proposed power price hikes for crypto miners. 

Media reports say that although President Kassym-Jomart Tokayev is not against crypto mining, he wants miners to obtain licenses, pay electricity bills on pre-set terms, and pay taxes.

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