From 2021 to 2023, the share of Kazakhstan in the global bitcoin hashrate decreased from 18% to 4%. This was announced by the analyst of Hashrate Index and Luxor Technologies Yaran Mellerud.
I recently spent two weeks in Kazakhstan and met with insiders in the country’s #bitcoin mining industry.
In this thread, I share some of the things I learned🧵 pic.twitter.com/yb3ZVTuJS1
— Jaran Mellerud (@JMellerud) May 3, 2023
In 2020-2021, the boom in the industry in the country was fueled by low-cost electricity, huge demand for hosting, access to cheap Chinese equipment, and lax regulation and tax incentives, he said. However, the rapid growth got out of control and Kazakhstan’s electricity system could no longer keep up with the demand of 1.5 GW of miners.
“Since September 2021, the grid operator has launched a power rationing regime, which has caused bitcoin miners to experience difficulties,” Mellerud said in his report.
However, the remaining mining companies in the country are optimistic due to the recent adoption of a relevant law. It obliges miners to obtain licenses and work only through approved crypto exchanges and pools, and also introduces a tax on electricity.
“With the introduction of the new law, the Kazakh mining industry is at a crossroads. Either the law will provide a stable regulatory environment necessary for the sustainable growth of the industry, or strict rules will finish off what is left of it, ”the analyst argues.
He emphasized that bitcoin mining in the country will not flourish until the problem of electricity shortage is resolved. Mellerud is convinced that a significant development of the industry can only be guaranteed by the transition of miners to their own generating facilities, including associated gas, wind and solar energy.
Another problem is the outflow of foreign capital, given the current macroeconomic situation.
“The sudden rise and fall of the Kazakh mining industry proves that political risks are always looming in the industry,” the expert added.
Bitcoin mining in Kazakhstan🇰🇿 pic.twitter.com/b2erXe84DW
— Jaran Mellerud (@JMellerud) May 3, 2023
Mellerud believes that the difficulties he describes will limit the growth of the mining industry in the country in the short term, but the long-term potential for mining in Kazakhstan is still huge.
Cryplogger previously reported that Kazakh miners paid $6.7 million in taxes for 2022.
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