Influx of crypto miners to Kazakhstan reportedly strains energy supply

Now responsible for the second biggest contribution to the Bitcoin hashrate, Kazakhstan’s energy grid may be unprepared to handle the addition of many cryptocurrency miners from China and others looking to capitalize on low cost electricity.

In a Nov. 10 report from Reuters, government officials in Kazakhstan estimate that unregistered crypto miners in the country could be consuming twice as much power as those registered to avoid paying taxes and other fees. Together, all crypto miners in the country could be using as much as 1.2 gigawatts, or roughly 8% of Kazakhstan's total power generation capacity.

According to Murat Zhurebekov, Kazakhstan's vice minister of energy, addressing the potential strain on the nation’s power grid “cannot be delayed any longer." He said officials planned to issue a directive which would limit the power consumption of unregistered miners, but did not specify how exactly they could be located.

Related: Kazakhstan Senate approves legislation regulating crypto service providers

With the exodus of crypto miners following a government crackdown in China, both Kazakhstan and the United States currently stand as countries responsible for the largest contributions to the Bitcoin (BTC) hashing power. Major mining pools including BTC.com and firms like Canaan have set up shop across the border.

In June, President Kassym-Jomart Tokayev signed legislation imposing additional taxes on the energy used by crypto miners legally operating in Kazakhstan. The law would reportedly introduce an additional $0.00233 fee per kilowatt-hour, scheduled to take effect starting in January 2022.

According to data from the Cambridge Centre for Alternative Finance, Kazakhstan generated more than 18% of the average monthly hashrate share for the BTC network as of July, with the U.S. contributing more than 35%. Cointelegraph reported in October that some estimates put cryptocurrency mining revenue in Kazakhstan at $1.5 billion over the next five years.