Bitcoin miners overload Kazakhstan’s electricity grid, forcing rations

Kazakhstan is cutting off customers who “over-consume” electricity after fleeing Chinese Bitcoin miners pushed its grid to breaking point.

Crypto-friendly Kazakhstan will ration electricity and even cut off over-consuming customers after a wave of Chinese Bitcoin miners pushed the country’s unprepared power grid to breaking point.

Due to its shared border and pro-crypto policies, Kazakhstan is the new home for thousands of Chinese mining rigs displaced by Beijing’s outlawing of all crypto-related activity.

As such, according to Cambridge University’s newly-updated Cambridge Bitcoin Electricity Consumption Index (CBECI), the country was the world’s second-biggest Bitcoin miner in August.

It sat behind only the United States as its share of global mining soared by more than 16.5%. According to CBECI’s IP data, Kazakhstan boasted 21.9% of Bitcoin’s overall hashrate in that month.

However, while the US was more-or-less ready to scoop up migrating Chinese hashrate for some time, Kazakhstan was not.

This has caused disruption to its power supply, which came to a head when three major power plants went offline last week.

As a result, the country’s national grid operator KEGOC announced tough new measures last week.

Kazakhstan on and off with Bitcoin

Kazakhstan seems to be struggling to decide exactly where it stands with Bitcoin mining.

Three years ago the country’s National Bank considered an outright crypto ban due to money laundering fears.

But in 2020 it pulled a complete one-eighty. It passed a law that not only legalized crypto mining, but encouraged licensed digital asset brokers.

At the time, Kazakhstan’s digital development minister Bagdat Musin announced the country had set up 13 mining farms. He also revealed that by 2025, investment in crypto mining would total 500 billion tenge ($1.2 billion). 

Kazakhstan may be set for another about-face, now that the realities of Bitcoin mining (and its electricity requirements) have set in.

The Blockchain and Data Center Industry Association estimates the country is currently home to around 250,000 rigs.

CBECI linked Irish and German IP addresses to a sizable amount of hashrate, but the researcher warned this was due to VPN usage. It’s also possible Chinese Bitcoin miners are using VPNs, which means there could still be lots of hashrate in mainland China.

KEGOC didn’t explicitly blame crypto for the shortages, but energy minister Magzum Mirzagaliyev has little doubt about what’s causing the additional strain.

“We have seen that our electricity consumption has literally increased by 7% in one year. That’s a very big increase,” he said in a September press conference, pointing out that the average increase is just two percent per annum.

While KEGOC set its own rationing requirements on “over-consuming customers,” Mirzagaliyev suggested government-imposed limits. These were one megawatt per mining facility and 100 megawatts for the sector as a whole.

In response, local Bitcoin miners said the country should be targeting illegal operations, not legit mining setups.

Even the US suffered energy shortages

Despite US states preparing to take in displaced Chinese miners, they are not immune to power shortages.

Earlier this year, Texas — one of the country’s most desirable locations for Bitcoin miners — experienced its own energy shortages and outages.

Read more: [Chinese BTC miners sent 200K rigs to Canada but can’t find enough power]

Texans were urged to curtail energy usage and even turn off their air conditioning in the midst of a heatwave.

This led to speculation that Bitcoin miners would be required to shutter operations at times of peak demand. 

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