Kazakh Crypto Miners Rally, Urging Presidential Intervention on Energy Prices
In Kazakhstan, a dominant force in the Bitcoin mining sector, local crypto-mining enterprises have voiced their concerns about escalating energy prices to President Kassym-Jomart Tokayev.
- Kazakh crypto miners are protesting high energy prices, impacting their operations.
- An open letter signed by eight major mining operators seeks intervention from President Tokayev.
- The miners express that the high energy cost is jeopardizing the crypto industry’s survival in Kazakhstan.
- Taxes on digital mining, introduced in January 2022, are partly to blame for the current situation.
Very Distressful Situation
In a significant move reflecting the distress pervading the cryptocurrency mining sector in Kazakhstan, eight principal cryptocurrency mining entities have dispatched an open letter to the nation’s President, Kassym-Jomart Tokayev, conveying their grievances related to spiraling energy costs. The country, being the third-largest Bitcoin mining market in global hash rate terms, is now witnessing a potential threat to the stability and viability of its crypto-mining industry.
The conglomerate, inclusive of BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution Ltd., VerCom, and KINUR INVEST, elucidated in the letter that the crypto-mining sector is grappling with a “very distressful situation.” A considerable concern is the looming possibility of all major industry players suspending their activities, with plans to completely wind down their business operations in Kazakhstan by year-end.
Kazakh Crypto Miners Appeals
The letter provides a snapshot into the dire predicament of the industry, which, according to the signees, is being undermined by escalated energy prices resultant from a decision to augment taxes on energy specific to crypto miners. The aforementioned circumstances have not only disrupted the government’s endeavors to regulate the crypto industry but have also precipitated a decline in Kazakhstan’s position amongst global crypto mining leaders such as the USA, Russia, and China.
The letter states that the Kazakh crypto-mining industry is in a “very distressful situation” because of the high energy prices for the miners. https://t.co/MbE49mJuWL
— Cointelegraph (@Cointelegraph) October 3, 2023
Moreover, despite the relatively lower costs of taxed electricity in Kazakhstan ($0.067 per kWh) in comparison to the USA, the levied taxes have accumulated to a modest $7 million (3.07 billion tenges) in tax payments from crypto mining entities in 2022. The alarming reality is that if remedial actions are not urgently implemented by the government, the digital mining industry in Kazakhstan is projected to become obsolete.
The appeal from the Kazakh crypto miners casts a spotlight on the global dilemma faced by the crypto mining industry – the balance between sustainable energy use and ensuring the viability of operations. While Kazakhstan’s step towards taxing energy consumption by crypto miners initially emerged as a means to address national concerns over power grid usage, the ramifications have been conspicuously detrimental for the industry within its borders. It prompts a crucial question that extends beyond Kazakhstan:
How can nations effectively navigate the tightrope between facilitating a thriving crypto industry and ensuring equitable and sustainable energy distribution? This situation certainly warrants monitoring as it could presage trends and regulatory shifts in the wider crypto-mining world. With the industry on the brink, the next steps of both the Kazakh government and crypto miners will be pivotal in shaping the future landscape of crypto mining in the nation and potentially even serve as a case study for other countries grappling with similar issues.