There is a crisis going on in Kazakhstan because of all the energy that’s needed to mine cryptocurrency. An article in the Financial Times says the country’s electrical grid operator, KEGOC, started to ration power to registered miners after their demand for electricity caused an emergency shutdown of three power plants in October.
Kazakhstan is experiencing power outages due to crypto mining
Demand for electricity is up almost eight percent compared to the usual 2% yearly, according to the latest estimates from the energy ministry. The country experienced blackouts in six regions since last month. Officials are now pinning the power outages on an increase in the number of people who are mining illegally without officially registering themselves.
China’s war against cryptocurrencies might be partly responsible for the recent increase in energy demand. They made mining of cryptocurrencies illegal earlier this year and that had a domino effect on the rest of the world. Because of the low cost of electricity in Kazakhstan, it is a favorable country for cryptocurrency mining initiatives.
Kazakhstan is having so much trouble with their energy needs that they’ve asked a Russian energy company to help them out by providing additional electricity. The problem is, they’re going to charge miners a compensation fee of one tenge (about 23¢) per kWh starting in 2022. This situation is forcing many miners to either cut back or even close down their operations. It is also forcing many other miners to move their operations to less risky ground.
There are worries the government isn’t being honest about the problems it’s having. According to the report, Luca Anceshi from The University of Glasgow said that Kazakhstan is using the mining crisis as a scapegoat for the country’s power issues.
If that’s true, it is certainly a warning for other countries if their local production of crypto assets takes off.
