Why Kazakhstan has become a benchmark in cryptocurrency mining
Why Kazakhstan has become a benchmark in cryptocurrency mining
Kazakhstan has become the second most crucial territory in cryptocurrency mining, accounting for just over 18.1% in bitcoin production, a significant (August) figure compared to 8% last April. The Central Asian country, which has 18.75 million inhabitants, is only behind the United States, the absolute leader after taking over China last October.
The United States climbed to the top of the mining podium, with a 35.4% share, thanks to China's battle with this practice for several months. The Asian giant included this mining process in the blacklist of industries in which investment by Chinese and foreign users is restricted or prohibited, causing many of these companies, some 50 or so, to be forced to leave the country for Kazakhstan.
Currently, the Kazakh country has the second-largest cryptocurrency mine globally, located in the city of Ekibastuz, in the northwest of the country. In it, the 'roars' of thousands of powerful computers can be heard 24 hours a day in 12-hour shifts for the 150 people who work there. An investment of 300 million dollars with the aim of mining cryptocurrencies. "The sound of the machines running excites me because it is the sound of money, digital money," says Yerbolsyn, owner of the facility, in a statement to the BBC.
All this consumption has put the Kazakh government on alert, explaining that mining contributed to a 7% to 8% increase in electricity used across the country in just one year. The amount of electricity going into mining in Kazakhstan is now equivalent to that needed to keep the lights on in a large city. "Electricity is not infinite in Kazakhstan, so we can say that at a certain volume of mining, we are going to stop," reports the country's deputy minister of digital development.
Outages of all communications caused much of the bitcoin crash.
However, during the last few weeks, social tensions against the country's government, mainly motivated by high fuel prices that escalated to historic highs, have caused the country to cut all communications, including the Internet. The domino effect reached bitcoin miners who, logically, we're unable to operate, generating 15% of them to be offline, the main reason why bitcoin plummeted to $40,000 (at $37,800 as of this Friday).
These bans should have ended last January 31. However, the Asian country has decided to extend these power cuts until February 7. The miners will not have it easy since, in addition, Kazakh legislators are weighing the creation of a law that would introduce new taxes to these cryptocurrency workers during this year, something that could cause an exodus of these people to other areas.
"As we saw with China when a country proves to be unstable for bitcoin mining, miners from that country end up moving to more favorable jurisdictions, making disruptions less and less frequent. This is how the bitcoin network becomes more resilient over time," bitcoin mining engineer Brandon Arvanaghi told CNBC.