how kazakhstan has closed the door on bitcoin mining

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Bitcoin miners have become the new nomads. They are not after hunting, but cheap energy. That made them migrate from China to Kazakhstan, which promised to be the new bitcoin mining paradise. It was for a few months, but now those expectations have come crashing down and the miners are once again having to move.

From China to Kazakhstan. China, which for years was the great bitcoin mining country in the world, has grown tired of it. Its leaders began a persecution of all activity related to cryptocurrencies and that caused the change of that industry.

The ideal destination was Kazakhstan, a country “attached” to China that therefore made it easy to move the machines and that had an apparently very favorable policy for this activity. Its president, Kassym-Jomart Tokayev, ad his intention to invest $1.2 billion over five years to attract the bitcoin mining industry. Energy was very cheap and regulation was non-existent or lax. a bicoca

The Great Crypto Shift

Source: Rest of World.

Energy wasn’t so cheap in the end. as they indicate in Rest of World, the thing went wrong when the power outages began to occur. The demand grew significantly with the arrival of the miners (7% year on year) and the Ministry of Energy blamed the miners, indicating that cuts to this type of activity would begin. It is curious that the government said I say and then say Diego, because it has been known for years that bitcoin mining is gluttonous to the max.

The thing did not stop there: taxes began to be a serious obstacle for miners. This activity made energy much more expensive for them: first they created a tax of 20 cents per kWh used in mining. In a month the tax was multiplied by ten, and Bağdat Musin described as “economic crime” the activity of the miners who did not register this business. Not to mention the internet outages that put production in check at the beginning of the year, of course.

Denis Rusinovich, co-founder of the Cryptocurrency Mining Group (CMG) had been working on developing this industry in Kazakhstan since 2017, and as he himself pointed out, “we went from being heroes to villains” (free translation of ‘We went from hero to zero’).

What happened in Kazakhstan. According to analysts, the cause of these outages and blackouts is not bitcoin mining, but a crumbling infrastructure dating back to the Soviet era. There is also a whiff of corruption, a black market that allows power plants to reserve certain capacity for their own needs at a reduced price, and there is talk of how certain companies can benefit from these reserves through private agreements, something that reduces the amount of energy available for distribution.

The Kazakh government blames the miners, dividing them into two groups. The “whites”, who register their activity, consumed 700 MW, but the government believes that the “grey” miners (who operate irregularly) consume twice that figure. Meanwhile, some miners blame others, and even a WhatsApp line has been created for snitches who report gray miners in exchange for a reward.

we better go. All this has meant that the miners are starting to move out and leave behind the ephemeral Kazakh paradise. Among the most popular destinations seems to be the United States, thus reinforcing its dominant position in this market. There some are already seeing the ears of the wolf: in Texas the miners they need an official approval to be able to operate.

Some look at Russia with many doubts —not only because of the war in Ukraine: its energy capacity is apparently “fair”—, while others are also considering countries like Argentina or Chile.

Image | Compute North

Bitcoin miners have become the new nomads. They are not after hunting, but cheap energy. That made them migrate from…

Bitcoin miners have become the new nomads. They are not after hunting, but cheap energy. That made them migrate from…

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