Kazakhstan is reportedly facing energy shortages that are believed to be caused by a recent spike in cryptocurrency mining in the country. According to The Financial Times, the local energy ministry estimated that demand for electricity has jumped by eight percent so far in 2021, resulting in blackouts in six regions since October.
Country officials have narrowed down the cause of the power cuts to unregistered cryptocurrency miners illegally operating from their homes or even factories. It is believed that this is caused by China’s decision of banning crypto mining back in May, prompting mining firms to shift operations and find great success in other countries such as Kazakhstan, where electricity cost is relatively inexpensive. Observations found electricity usage in the Central Asian country had increased significantly sometime after the ban was made official, The Financial Times added.
The report also noted that there are 50 registered cryptocurrency miners in the country. Local electrical grid operator Kazakhstan Electricity Grid Operating Company (KEGOC) said it would start rationing energy for the miners after their demand reportedly invoked an emergency shutdown mode at three power plants in October. The company added that power routed to the registered miners will also be the first to be disconnected should grid failures are to occur.
To compensate for the energy shortages, Kazakhstan is reportedly requesting assistance from a Russian energy company to supplement the national power grid. In addition, it will charge registered miners a compensation fee of KZT1 (~RM0.0097) for every kilowatt-hour starting in 2022.
As most of us are aware of by now, cryptocurrency mining consumes a massive amount of energy, which also leaves a significant impact on the environment. Outside of Kazakhstan and China, other countries such as Iran and also our own have cracked down on illegal mining operations that have been relying on stolen electricity. El Salvador, on the other hand, has announced plans to build an entire city dedicated to Bitcoin mining – at the base of a volcano, of all places.
(Source: The Financial Times)