Cryptocurrency miners in Kazakhstan are experiencing significant electrical shortages because of an increase in mining operations.
As miners pour in from China, which cracked down on cryptocurrency earlier this year and prohibited crypto-based transactions in September, Kazakhstan has been dealing with an overburdened electrical grid.
According to the Financial Times, Kazakhstan’s electricity demand has increased by roughly 8% since the beginning of the year, a significant increase from the country’s average yearly growth of 1 or 2%.
Chinese miners in Kazakhstan
Over 87,849 “power-intensive” mining rigs have crossed the border from China to Kazakhstan. Based on research from the University of Cambridge, the country is currently ranked second — only behind the United States — as one of the most popular crypto mining locations in the world.
Three of Kazakhstan’s most important coal-fired power stations were forced to shut down last month.
In response to the disruptions, the country’s Ministry of Energy said that new mining farms would be limited to utilizing no more than 100 megawatts (MW) for the next two years, but later reversed this decision for authorized miners.
The Kazakhstan Electricity Grid Operating Company (KEGOC) has also warned that it will begin restricting electricity to 50 government-registered crypto miners to help reduce power shortages.
Grey miners
The growth in “grey miners,” also known as unregistered miners who unlawfully mine for cryptocurrency, is being blamed by Kazakh officials.
Experts believe that these miners consume 1,200 megawatts (MW) of power from the country’s overburdened power grid.
Kazakhstan will begin requiring real miners to pay up in 2022, both to identify registered miners from “gray” miners and to alleviate power shortages.
Legitimate miners will be charged 1 Kazakhstan tenge ($0.0023) per kWh, as per the country’s plans.
For the time being, Kazakhstan may have to rely on Inter RAO, a Russian energy company with which it reached an agreement earlier this month, to supply an extra boost of electricity during the chilly winter months.
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