Authorities in Kazakhstan have calculated the energy used in the country’s crypto mining industry which competes for electricity with other sectors of the economy and households. The government has also estimated the additional supply necessary to meet the growing demand from mining farms and proposed a cap on the power rating of new facilities.
Kazakhstan Measures Power Usage in Crypto Mining Sector, Estimates Deficit
In an effort to explain why Kazakhstan is considering imposing restrictions on new cryptocurrency mining operations, the Ministry of Energy told local media that data centers minting digital coins use 5 megawatts (MW) of electricity each hour. Just a single mining facility burns an average of 3.6 million kilowatts (kW) a month, the department stated, noting that the amount equals the consumption of 24,000 homes.
As China has been cracking down on cryptocurrency miners this year, the Central Asian nation has become an attractive destination for many businesses from the mining industry with its low energy rates. As a result, electricity consumption has increased by 7.4% in the first nine months of this year, reaching almost 83 billion kilowatt-hours (kWh), government figures show.
Officials in Nur-Sultan have already blamed the spike on some 50 mining farms operating in the country. With a total project capacity of over 972 MW, the load they currently exert on Kazakhstan’s power distribution network has been estimated at more than 693 MW.
On top of that, power usage by illegal mining facilities is likely to have risen, too. The Energy Ministry told the business news portal LS that the excess consumption growth, which can be attributed to mining centers, is around 1,050 MW while the share of underground crypto miners is believed to be in the range of 250 to 450 MW.
Government Wants to Limit Capacity of New Mining Farms to 100 MW
Meeting the growing needs of the mining industry would require an increase of electricity generation by at least 1,000 MW which can happen in the next four to five years, the department noted. In early October, Kazakhstan’s Minister of Energy Magzum Mirzagaliev said that the government intends to build power plants with a combined capacity of 3,000 MW during the same period.
To prevent the situation from deteriorating, the ministry is recommending a 100-megawatt capacity limit on new consumers connecting to the power grid. The measure is expected to affect projects building crypto mining farms in the country.
This isn’t the only bad news for cryptocurrency miners and potential investors. This month, lawmakers put forward a proposal to introduce registration for mining entities operating in the country. Concerned with the growing energy consumption in the sector, a group of deputies in the Mazhilis also called for the adoption of higher electricity rates for enterprises involved in the extraction of digital currencies.
Do you expect Kazakhstan to limit the size of crypto farms and introduce other restrictions and tariffs for the coin mining sector? Tell us in the comments section below.
