Kazakhstan is dealing with electricity shortages, and the reason is somewhat peculiar and maybe even unexpected. According to reports from local media outlets, since China decided to ban cryptocurrency mining, many miners have migrated to Kazakhstan to “find shelter.” The particular country is open to welcoming miners, so it is growing into a hub.
However, these entities aren’t just hobbyists who are looking into mining as a side-gig. They are large firms dedicated to cryptocurrency mining, deploying state-of-the-art technology to maximize efficiency on large volumes. Naturally, they need power. Lots of power.
Kazakhstan is now dealing with an energy demand spike of 8% compared to last year, translating to approximately 1,200 megawatts. The Asian country is looking to plug this gap by turning to nuclear power.
Right now, there are no operational nuclear power plants in the country, and the plan requires building a new one, so a significant investment is inevitably involved. Nevertheless, taxing miners is predicted to bring roughly $1.5 billion into the government’s drawers over the next five years, so it is an investment worth approving.
Coal would be an option, but Kazakhstan has pledged to lower its carbon emissions and is actually in the process of decommissioning the existing coal-relying power plants. These provide the country with 70% of its domestic energy production, so a viable “way out” is needed, and nuclear could be it.
Until that plan is approved and more power is made available in the country, the energy supply is being rationed, and cryptocurrency mining companies that operate officially in Kazakhstan will have to cut their mining down to 50% or more.
From 2022, these firms will pay a new tax of $0.0023 per kilowatt-hour and may be limited to 1 megawatt per facility. Additionally, the government may also introduce a national cap of 100 megawatts for each entity.