Kazakhstan Cuts Power to Crypto Miners

Yesterday, Kazakhstan, Kyrgyzstan and Uzbekistan suffered a major power outage which may once again redraw the crypto mining map.

What Happened?

On Tuesday, January 25, a huge power outage led to a complete blackout in the south of Kazakhstan, most of Kyrgyzstan and eastern Uzbekistan. According to TASS, capitals of Kyrgyzstan and Uzbekistan also suffered from the power outage.

The energy systems of these former Soviet republics are interconnected, which led to simultaneous problems when the outage occurred.

According to Cambridge Bitcoin Electricity Consumption Index, Kazakhstan’s average monthly hashrate share was 18.10% in August 2021, so the country was second only to U.S. in mining Bitcoin.

This may change soon as Kazakhstan’s miners have already been cut from electricity supplies until the end of January. Miners have reportedly warned that they would leave Kazakhstan if they remained cut out of the power grid.

The World Becomes More Hostile to Crypto Mining

Leading countries in Bitcoin mining are the U.S., Kazakhstan and Russia. The recent developments on the regulatory front look worrisome.

In the U.S., Fitch Ratings has recently raised concerns that crypto mining could become a risk to power utilities.

In Russia, the central bank announced that it wanted to ban crypto mining (although it looks that the Russian Ministry of Finance is against this idea).

In Kazakhstan, miners have already been cut from power, and it remains to be seen whether the industry will get back to normal in early February.

Kazakhstan has recently suffered unrest, and it may be politically convenient to blame miners for the outage instead of searching for other reasons. Regulatory risks for mining in Kazakhstan have clearly increased in recent days.

Miners need access to cheap and reliable electric supplies, and the number of countries which can provide this opportunity is limited. At this point, it looks that U.S. share in global crypto mining will increase, which will make mining especially vulnerable to any U.S. regulatory action.