Crypto miners blamed for Kazakhstan’s energy crisis

What just happened? China’s crackdown on cryptocurrency mining has affected more than just the Asian nation. Cryptocurrency miners in Kazakhstan, many of whom came from China, have caused an energy crisis in the country, prompting its power grid operator to begin rationing electricity.

the Financial times reports that electricity demand in Kazakhstan has increased about eight percent this year, far more than its usual average growth rate of one to two percent. The increase has led to power outages, blackouts in six regions of the country since October and outages at three power plants.

Power grid operator KEGOC has now announced that it will ration electricity to 50 registered crypto miners. They will also be the first to disconnect in the event of a network failure.

Kazakh officials say much of the increased energy use is the fault of “gray miners,” unregistered crypto miners who operate from home or factories. They are estimated to be behind the consumption of 1,200 megawatts (MW) of energy from the country’s electricity grid.

Starting next year, registered miners will be charged a compensation fee of 1 tenge (around $ 0.0023) to help with the situation and identify illegal miners. Kazakhstan is also looking at nuclear power as a way to meet electricity demand and has asked Russian power company Inter RAO to contribute to the country’s national power grid.

Coindesk reports that cryptocurrency mining company Xive closed a 2,500 rig mine in southern Kazakhstan recently due to lack of sufficient power supply. “It is clear that mining in southern Kazakhstan is no longer possible,” co-founder Didar Bekbau told the publication.

The Times estimates that more than 87,849 “energy intensive” mining rigs moved from China to Kazakhstan following the former’s crackdown on mining and its statement that all crypto transactions they are illegal. However, some argue that miners are becoming scapegoats for problems with Kazakhstan’s power grid.

Another place that has seen an influx of crypto miners from China is Sweden. The energy consumption of Bitcoin mining in the Scandinavian country increased several hundred percent between April and August. The environmental impact has prompted Sweden to request a Ban throughout Europe in all cryptocurrency mining.