Officials in Uzbekistan have announced a massive energy hike aimed at Bitcoin miners, but they are not the first in their region to take an exasperated stab at reining in the crypto industry.
Often, before a local populace is even aware, a place has become popular for Bitcoin miners.
Various factors play into a miner’s choice of location: primarily, the cost of electricity.
This seems to have been the case in Uzbekistan, as well as in nearby Kyrgistan, recently, which noted that Bitcoin miners were consuming more electricity than nearby cities.,
New regulations introduced in Uzbekistan would sharply increase the cost of mining cryptocurrency, potentially making it unprofitable.
Special Fees For Mining On The Rise
Uzbekistan is not the first country to impose special duties, or treat crypto mining differently than other business enterprises. For example, Norway decided that crypto miners should pay a higher fee not long ago.
The suggested rules say, in part, that “businesses working with crypto assets, including miners, will be obliged to pay a rate three times that currently charged for their business category, no matter their power capacity.”
The trouble is, no matter how “efficient” an operation is, in order to be competitive, a given miner will need to have a lot of machines running at once. In order to do that, they will consume more energy.
But this is a given, for anyone looking at the industry, no matter their level of blockchain understanding.
Therefore, the move might be perceived as a money grab on the part of the government.
The former Soviet bloc country has excellent, self-sufficent power facilities, and therefore the cost of energy is relatively low, at around 3.5 cents per kWh. Now, crypto miners would pay a premium. It’s not outwardly clear how such miners might be identtified, but the goal of the legislation is that miners should be separated from regular energy consumers.
Governments Reacting To Crypto
The move could certainly stifle the crypto industry, but only in the region. Beyond that, the impact would seem to be minimal – other miners see a boost in competitiveness as Uzbeki miners drop off, or others might just take their place as they quit.
Cryptocurrency has technically been illegal in nearby Kyrgyzstan since 2014, and the country has decided that it needs to crack down on those who engage in mining.
Mining is perhaps the most over activity a person can partake in; everything else involving cryptocurrency can be done with some degree of privacy, but the amount of infrastructure and work that goes into mining simply draws attention.
