Kazakhstan Feeling the Pinch of Crypto Mining Influx

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  • The crypto mining boom in Kazakhstan has led to an unstable domestic electricity supply
  • The country has seen an 8% increase in domestic energy in 2021
  • Kazakhstan’s president has suggested that nuclear power could ease the country’s electricity problems

Kazakhstan is feeling the effects of an influx of cryptocurrency miners from China following the latter’s ban earlier this year, with energy demand rising so much that electricity is becoming unreliable. The country has experienced an 8% increase in domestic energy use this year which is being put down to the surge in cryptocurrency miners from China, with Kazakhstan’s president Kassym-Jomart Tokayev telling a banking conference that building nuclear power stations was the best way to alleviate such spikes in electricity usage.

Kazakhstan Crypto Mining Continues to Surge

Cryptocurrency mining was already growing in Kazakhstan before the China mining ban, with the 2017 bull market inspiring many in the country to take up the practice. In 2020 the government announced that it was expecting $738 million in development funds to pour into the country over the following three years to help with the expansion of cryptocurrency mining in the country, a circumstance which has been magnified by the exodus of miners from China.

Kazakhstan has picked up the slack from its neighbor with its hashrate rocketing in recent months, but the downside for the cryptocurrency industry is that much of the power used for mining activities in the country relies on burning coal, something that cryptocurrency supporters were hoping would decrease with the death of China mining.

Increase Threatens Electricity Stability

However, the surge in crypto mining has brought an energy crunch, with Kazakhstan’s Ministry of Energy attributing the 8% increase in domestic electricity consumption in 2021 to crypto miners. This has brought with it a deficit in the domestic power supply and contributed to unreliable electricity services, which Kazakhstan’s president has announced he hopes to solve with nuclear energy.

President Tokayev told bankers at a November 19 meeting that he thinks building a nuclear power plant will help alleviate the pressure on the system, especially as the country is keen to retain the mining outfits that have moved to the country. However, if this comes at the cost of a reliable domestic energy service then this will not be a popular move.