Miners at Crypto mines in Kazakhstan are facing severe cold weather as a result of power outages

Matthew Heard, a software developer from San Jose, is concerned about his 33 bitcoin mining machine in Kazakhstan. Last week, he was shut down in an attempt to test the country’s grid to reduce the power used by crypto mining operators.

“Days have passed since my machine was online,” he said. “In the last week, even though my machine came, it still stays.”

Kazakhstan has been battling the growing popularity of crypto mining, which occurred this year due to rising crypto currencies and among other things due to the migration of miners to its borders after China made mining illegal in May.

After three major power plants in the north of the country went abruptly last month, the government operator, Kegoc, warned that it would begin distributing power to 50 crypto state-registered mines, and said they would be “eliminated first.”

Heard which was established in Kazakhstan in August and operated by Enegix, a company that leases facilities for the use of crypto mining machines.

He said his prices had dropped from $ 1,200 Bitcoin per day to $ 800 in October, and last week his machine had been operating for 55 percent of the time. Owners of machines are not informed when the shutdown will occur or will return online, he said.

The group’s pressure on crypto mines has caused power outages in towns and villages in six parts of the country since October. The Ministry of Energy estimates that electricity demand has increased by 8 percent since the beginning of 2021 when mining companies began to move out of China, compared to an average annual growth rate of 1-2 percent in recent years.

According to data compiled by FT, at least 87,849 renewable energy mining machines were imported from Kazakhstan from China.

Kazakh mining company Xive.io, which pays foreign customers to shut down its operations, shut down a large crypto mine on Wednesday and disrupted 2,500 mining equipment, a power outage that made its operation impossible.

Xive.io co-founder Didar Bekbau tweeted a November 24 video of the last mined mines removed, with the caption “More work, [our] hopes have been shattered ”. Mu a live stream interview on YouTube in October, warned that the company was “in trouble” because it had invested in building new equipment and fields before it became aware of power shortages.

Officials and industry experts have blamed energy shortages for the growing number of “gray miners”, companies and individuals who work illegally in basements and abandoned factories, since the ban. The Ministry of Energy thinks it is removing 1200MW of electricity from the power grid – twice as much as the “clean” registered ones.

In October Deputy Minister of Energy Murat Zhurebekov, said the response to the ban “could not be delayed”.

Denis Rusinovich, co-founder of the Maverick Group, a mining company operating in Kazakhstan, said that while some miners were working legally, others had “moved quickly and cut corners”. Miners “will be monitored because they do not have any records,” he said.

To address the decline, from 2022 licensed miners will have to pay an additional 1 Kazakhstani tenge ($ 0.0023) per kWh, a move that miners like Rusinovich see fit, because it will “divide the miners”.

Until the interest rate hike begins, Kazakhstan has turned to Russia to increase its stockpiles, and talks with Moscow’s state-owned company Inter RAO to strengthen international power. On November 16, Alexander Novak, Russia’s deputy prime minister, announced that Russian companies would provide power to their southern neighbors, saying the agreement “should be based on trade”. He did not mention her actual value.

It is unknown at this time what he will do after leaving the post. Inter RAO chairperson Alexandra Panina told TASS, a Russian news agency, that the company could provide 600MW, “in good time” when she estimated that the reduction could reach 1GW.

The Ministry of Electricity and Inter RAO did not respond to a request for comment.

Some foreign miners, such as Ricky Hoo of Sydney, who owned 40 machines in Kazakhstan under the control of Enegix, have begun relocating the machine despite the country having a 12 percent tax on the cost of the machine.

“Kazakhstan was one of the first places I sent to miners because they had cheap electricity, but they have all been shut down now,” he said. It has shipped some of its equipment to Russia, the third largest mining country after Kazakhstan.

The cut also raises new concerns about the long-term sustainability of power generation in Kazakhstan. Luca Anceschi, a professor of Eurasian studies at the University of Glasgow, said the government’s focus on “gray miners” was an attempt to address a number of technical issues, such as grid unpreparedness and the inability to transport energy from coal-fired north to rural areas. in the south. Kegoc has announced that it intends to take part in a project to repair damaged plants and power lines.

“Of course, having electricity from Russia could solve this problem in the short term, but I think there is a lot of discussion that Kazakhstan is pursuing in terms of energy policy,” Anceschi said. He said the government thinks Bitcoin mining could be profitable, but “did not bother to create production capabilities that could meet existing or expected outcomes”.

“It is one of the most powerful countries in Asia,” Anceschi said. “On paper, this should not happen.”

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