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10 Nov, 2021 10:38

Bitcoin craze robs Kazakhstan of electricity

Bitcoin craze robs Kazakhstan of electricity

With Kazakhstan facing an electricity shortage caused by the sharp increase of cryptocurrency miners operating in the country, Nur-Sultan is now turning to its northern neighbor Russia to provide extra energy capacity.

Speaking last week, the director of Kazakhstan’s Electric Power Development Department revealed that state-owned energy company Samruk-Energo had entered into negotiations with Russian energy giant Inter RAO, with a view to creating a joint venture.

Aidos Daribayev also noted that during the first ten months of 2021, the country’s energy consumption increased by 8%. In previous years, the percentage growth tended to sit at around 1-2%.

According to the government, the power shortage is due to a sharp growth in cryptocurrency mining caused by China’s decision to ban the practice. Following the change in legislation, equipment used to mine digital assets like Bitcoin was moved across the border.

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Cryptocurrency mining uses electricity and high-powered computers to solve computational math problems. The solutions are so complex that they are impossible to be solved by hand and would even be difficult for regular computers to successfully complete. Once a problem is solved, the computer owner is rewarded with a cryptocurrency coin, such as bitcoin.

Following the ban in China, Kazakhstan became the world’s second-largest crypto miner, behind the US.

According to Kazakhstani First Deputy Energy Minister Murat Zhurebekov, Russia’s power overflows are helping Kazakhstan cope.

Earlier this year, President Kassym-Jomart Tokayev signed a law to force cryptocurrency miners to pay additional fees for their electricity. The surcharge of 1 Kazakhstani tenge ($0.0023) per kilowatt-hour will be added to any crypto mining operation.

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