Author | Colin Wu

Recently a large number of mining sites have been affected by power restrictions due to power constraints and winter shortages in Kazakhstan. Southern Kazakhstan is focusing on cleaning up illegal mining in combination with electricity usage data and IP addresses, and some organizations have decided to move from Kazakhstan to the US.

Kazakhstan's national grid operator has begun limiting power rationing to crypto miners, according to a new report from Neftegaz.RU. Energy Minister Magzum Mirzagaliyev has proposed limiting the power supply to 1 MW per mining site and 100 MW for the entire industry.

On October 15, national grid operator KEGOC announced power restrictions, giving similar statements to those made by the energy minister, saying it would cut off "over-consuming" customers.

According to Kazakhstan Today, Kazakhstan's Energy Minister Magzum Mirzagaliev told local media that electricity consumption in 2021 is up 7% compared to last year, with the surge in demand largely due to the growing number of data centers dedicated to cryptocurrency mining.

He stressed that "this is a very big growth" and that the activities of crypto miners now do not have a significant positive impact on the socio-economic indicators. Mining consumes the cheap electricity generated in Kazakhstan, competing with the growing needs of the rest of the economy and the population. The minted cryptocurrency is usually sold elsewhere and profits are accumulated abroad.

Still, he insisted that Kazakhstan needs to develop its crypto mining sector and expressed confidence that the industry will evolve. Mirzagaliev pointed out there are “very good opportunities” for that, highlighting the country’s potential to expand the use of  renewable energy.

Kazakhstan is facing a power shortage, tweeted Didar, a Kazakh miner. The government is preparing for action. South Kazakhstan is at risk of strict electricity restrictions for mining.

Sources told us that winter power shortages are the norm in Kazakhstan, and that building a mining farm in Kazakhstan should have taken this into account beforehand. Kazakhstan is rich in coal resources in the north, the electricity supply is relatively sufficient, the south is mainly natural gas power generation so there is a large gap in winter. Because of the backward construction of the power grid, the electricity from the north cannot be delivered to the south on a large scale, which is one of the reasons why it is difficult to improve the shortage in the south.

The core of Kazakhstan's electricity shortage also lies in the small size of Kazakhstan's overall electricity supply. Data show that in 2020, Kazakhstan's annual electricity generation capacity is 106 billion KWh and electricity consumption is about 105 billion KWh, with a slight excess of electricity supply. Kazakhstan currently has 155 power stations, 69% of which are coal-fired and 9% are hydroelectric.

According to the CCAF, the latest data shows that the U.S. accounted for 35.4% of global bitcoin hashrate at the end of August, more than double the 16.8% at the end of April. Kazakhstan and Russia follow with shares of 18.1% and 11%, respectively (up from 8.2% and 6.8% in April).

Considering that Bitcoin consumes between 100 billion KWh and 150 billion KWh of electricity throughout the year, Kazakhstan added about 10 billion KWh of electricity (10% of the entire network's hashrate), which is close to the 7% increase in electricity consumption stated by the energy minister above.

In comparison, China generated 7.779 trillion kWh of electricity in 2020, the United States 4.287 trillion kWh, and Russia about 1.0854 trillion kWh. This means that Kazakhstan's power generation is only 1/42 of that of the U.S., while Kazakhstan's bitcoin mining consumes 1/2 of the electricity consumed by the U.S. So for Kazakhstan, the short-term increase in hashrate is indeed "unbearable".

However, Kazakhstan has the infrastructure inherited from the former Soviet Union and will gradually expand its power generation in an orderly manner. But Kazakhstan is not a country with a regulated market environment under the rule of law, such as the United States and Canada, and there may be some fraud and corruption which need to be pay attention. (Cover from azcoinnews)

Follow us

Twitter: https://twitter.com/WuBlockchain

Telegram: https://t.me/wublockchainenglish