The rise of crypto has been reported since November last year, and it is not stopping any time soon. One central Asian country, in particular, is at the cusp of this new boom. Kazakhstan is now home to one of the world’s biggest crypto mining sites.
In the latest crypto news, Kazakhstan crypto-mines are catching global eyes for their cheap power rates and large land areas, which are perfect for mining.
However, local political unrest is brewing in the country. Recently, the unrest has even caused power outages all over the nation, which has disturbed operations. Aside from that, the government is also starting to crack down on mining as a way to limit the country’s use of energy.
Looking at these factors, is it possible to sustain Kazakhstan crypto-mine growth in the long run?
‘Mining,’ bitcoin, and more
Crypto is the latest tech craze where users can create or “mine” digital money using computers. In order to “mine” a coin, computer units must solve complex math problems.
The process is usually done at large data centers called farms, where the units run 24/7 doing calculations. As crypto is a blockchain-based currency, the more units that are in the network, the more computations the units have to make. However, because farms run all day long, it also means that they use large amounts of energy.
As a member of the blockchain, everyone involved in mining and creating coins can see transactions play out in the network in real-time. This transparent system is what fueled the initial appeal of investors to crypto, as it did not have to go through intermediaries like banks.
The Kazakhstan crypto-mine boom
Kazakhstan’s crypto-mines are ideal for investors all over the world. For one, the country has low power rates and large, vast tracks of land. The country averages five cents per kWh, much lower than nine to 11 cents in China, Russia, and the US. Because of this, the country hosts 18 percent of global bitcoin operations.
China’s crypto miners are quickly moving operations to Kazakhstan, where low energy costs keep prices low and yield high. Despite being the world’s largest producer of crypto units, China has a ban on crypto mining.
Because of this, one of China’s largest miners, BIT Mining, has moved its 320 servers to Kazakhstan. While another company, The9, has partnered with a local firm in Kazakhstan to build a mining facility. Independent investors have done the same, to great success.
In 2020, President Tokayev made crypto mining legal in Kazakhstan. Some regulations also made it possible for banks to offer crypto accounts, which make it easier for people to mine.
Of course, this comes at a great cost for the environment. As a country running on coal, fossil fuel emissions in Kazakhstan have risen, prompting the state to take action.
Local crises threaten bitcoin stability
Kazakhstan’s emissions per energy unit are now higher than China’s.
To counter this, the government wants to crack down on illegal “grey” miners, which consume twice the amount of energy as “white” miners. Currently, it is also looking to create nuclear plants and move to cleaner energy.
But another crisis has exposed the weight of Kazakhstan crypto-mines on the industry.
This January, a series of attacks have forced the state to shut down the internet. Not surprisingly, the impact on the crypto industry was immense. Bitcoin prices quickly dropped.
The unsteady nature of crypto is the cause of concern for its critics. Also, the political tension raises further questions on the stability of Kazakhstan’s crypto-mines. Whatever the case, the fate of the country, and crypto for that matter, lie in the fickle digital ecosystem.
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