Cryptocurrency mining operations require a lot of electricity – Copyright AFP CHRISTOF STACHE
Kazakhstan, one of the world’s top places for cryptocurrency mining, has moved to take advantage of the power-hungry industry that has often burdened the Central Asian country’s aging power grid.
The lower house of the parliament of the former Soviet country approved legislation on Wednesday that introduced a tax and a compulsory license for companies that mine cryptocurrency, among other measures, state news agency Kazinform reported.
In recent months, Kazakhstan, the region’s largest economy, has sought to promote the expansion of cryptocurrency mining while cracking down on illegal mining farms.
“The aim of the bill is to eliminate illegal mining and create a proper legal environment for legal entrepreneurs,” lawmaker Yekaterina Smyshlyayeva, who introduced the bill, told AFP on Thursday.
He added that this activity is a “capital-intensive business and the risks are very high.”
“Miners will only be able to buy electricity from the general power grid in case of surplus,” he said on Wednesday as quoted by Kazinform.
According to data from the University of Cambridge, Kazakhstan was the third largest cryptocurrency miner in the world as of January 2022, behind the United States and China.
Mining cryptocurrencies, like bitcoin, requires powerful computers to solve complex mathematical puzzles, which results in the consumption of enormous amounts of electricity.
Kazakhstan has many benefits for the industry, including the cheapest electricity in the world and a favorable cold climate for cooling computers.
It has also seen an influx of miners from neighboring China, where cryptocurrency mining is officially banned.
Kazakhstan’s energy system dates back to the Soviet era and, despite investments, remains in shambles and regularly experiences power deficits.
In March, the Kazakh government announced the closure of some 100 illegal mining farms, including those of former president Nursultan Nazarbayev’s brother.