Kazakhstan miners face "difficult winter" as some mines lose power

Wu said he learned that due to the recent power shortage and winter power shortage in Kazakhstan, a large number of mining farms have been affected by power rationing. The south has focused on cleaning up illegal mining by combining electricity consumption data and IP addresses, and some institutions have decided to move from Kazakhstan to the United States.
According to the latest report from Neftegaz.RU, Kazakhstan's national grid operator has begun restricting electricity rationing for crypto miners. Energy Minister Magzum Mirzagaliyev proposed limiting power supply to 1 megawatt per mining farm and 100 megawatts for the entire industry. The proposal was criticized by miners, and the Blockchain and Data Center Industry Association believes that the government should crack down on illegal mining rather than restrict companies that pay taxes. On October 15, the national grid operator KEGOC announced the power rationing and gave a similar statement to the energy minister, saying that 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 increased by 7% compared to last year, with the surge in demand mainly due to the increasing 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 have no significant positive impact on socio-economic indicators. Mining consumes cheap electricity generated in Kazakhstan, but the mined cryptocurrencies are usually sold elsewhere and the profits are accumulated abroad. However, he still said that Kazakhstan needs to develop its crypto mining industry and expressed confidence in the development of the industry, which has "very good opportunities" and emphasized the country's potential to expand the use of renewable energy. The department has prepared a number of recommendations on how to deal with power shortages caused by miners. These measures include limiting the power consumption of existing mining data centers and suspending the approval of new crypto mining farms.
Kazakh miner Didar tweeted that Kazakhstan is facing a power shortage. The government is preparing to take action. Southern Kazakhstan faces the risk of strict restrictions on mining electricity. Relevant people told Wu Blockchain that power shortages in winter in Kazakhstan are normal, and this situation should be taken into account in advance when building a mine in Kazakhstan. The north of Kazakhstan is rich in coal resources and has a relatively sufficient power supply. The south mainly uses natural gas for power generation, so there is a large gap in winter. Because of the backward construction of the power grid, electricity from the north cannot be transmitted to the south on a large scale, which is one of the reasons why the shortage in the south is difficult to improve.
The core of Kazakhstan's power shortage is that the overall scale of Kazakhstan's power supply is relatively small. Data shows that in 2020, Kazakhstan's annual power generation was 106 billion kWh, and power consumption was about 105 billion kWh, with a slight surplus of power supply. Kazakhstan currently has a total of 155 power stations, of which 69% are coal-fired power stations and 9% are hydropower stations.
According to the Cambridge CCAF Financial Center, the latest data shows that as of the end of August, the United States accounted for 35.4% of the global Bitcoin computing power, more than double the 16.8% at the end of April. Kazakhstan and Russia followed closely behind, with shares of 18.1% and 11% respectively (up from 8.2% and 6.8% in April). Considering that Bitcoin consumes 100 billion kWh to 150 billion kWh of electricity throughout the year, Kazakhstan has added about 10 billion kWh of electricity consumption (10% of the total network computing power), which is also close to the 7% increase in electricity consumption mentioned by the above-mentioned Minister of Energy.
In comparison, China's electricity generation in 2020 was 7.779 trillion kWh, the United States was 4.287 trillion kWh, and Russia was about 1.0854 trillion kWh. This means that Kazakhstan's electricity generation is only 1/42 of that of the United States, but Kazakhstan's Bitcoin mining consumes half of the electricity consumed by the United States. Therefore, for Kazakhstan, a sharp increase in computing power in the short term is indeed "unbearable."
However, Kazakhstan has the infrastructure left over from the former Soviet Union and will gradually and orderly expand its power generation scale. However, industry insiders also remind that Kazakhstan is not a country with a legal market environment like the United States and Canada, and there may be some fraud and corruption. Under the low construction cost and electricity price, there are also other risks that cannot be underestimated.