Bitcoin Network Grows Almost Completely, Kazakhstan Faces Power Shortages Due To Crypto Mining

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Bitcoin mining

Bitcoin Network Grows Almost Completely, Kazakhstan Faces Power Shortages Due To Crypto Mining

Kazakhstan, which accounts for the third largest share of the Bitcoin mining hash rate after seeing its share increase 6 times between September 2019 and April 2021, is considering measures such as the surcharge and limiting energy consumption while Kyrgyzstan has already increased electricity tariffs for crypto miners.

Much like the price of Bitcoin, which trades around $ 46,700, up 64% from the May 19 low of around $ 28,500, the hash rate of the larger network is experiencing a strong rally.

After China’s crypto mining ban, Bitcoin’s hash rate fell 66% from 197.6 Th / s, an all-time high in mid-May. After hitting a low at the end of June, the hash rate slowly recovered and has now risen 134% since then to stand at 160 Th / s, a level mostly seen between February and April.

This recovery represents miners who keep coming back online as the People’s Bank of China takes an even stronger regulatory stance against crypto.

Amidst all of this, Kazakhstan faces power shortages and the government blames cryptocurrency mining.

In 2021, electricity consumption in the country increased by 7% compared to last year, a government official revealed at a press conference, based on figures released by grid operator KEGOC .

The University of Cambridge noted in a study this year that Kazakhstan’s share of global bitcoin mining increased six times in less than two years to capture bitcoin’s third hash rate.

“An energy-rich country located in Central Asia, its share increased from barely 1.4% in September 2019 to 8.2% in April 2021. noted The report.

While China’s share of Bitcoin’s total mining power increased from 75.5% in September 2019 to 46% in April 2021 during the same period, the United States’ share in the total hash rate of Bitcoin fell from 4.1% to 16.8%, which is in second place. The Russian Federation accounts for 6.8% of the shares and Iran for 4.6%, ranking fourth and fifth, respectively.

According to Energy Minister Magzum Mirzagaliev, this increase in demand is due to an increasing number of data centers for crypto mining, who told local media that it was a “very strong increase”.

“We have to make a number of decisions. First, we need to be able to ensure that system operators have the right to limit or reduce consumption primarily from mining data centers at a time when there may be a power shortage. “

Mirzagaliev then insisted that Kazakhstan must develop its crypto mining sector. The head of the Energy Ministry said there are “very good opportunities” for the industry, stressing the country’s potential to expand the use of renewable energy.

Last July, the government decided to introduce a surcharge for electricity used by miners. Other measures to deal with power shortages caused by miners include limiting the power consumption of existing mining data centers and suspending the connection of new crypto farms to the grid.

The government of Kyrgyzstan has already revised its electricity tariffs for crypto miners to “ensure the stable and reliable operation of the energy sector.” But crypto mining entities are not the only ones affected; rather, they are just one of 14 groups that include those in the gold mining industry and producers of alcoholic beverages.

With a 12.5% ​​increase in the tariffs, crypto miners will pay a Kyrgyz som of 2.52 (less than $ 0.03).

Last year, the Economy Ministry also proposed a 15% tax on the cost of electricity consumed to mine crypto, and the bill further required these companies to apply for registration to operate legally. in the country.



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