The machines used to mine cryptocurrency are so powerful that they require a large amount of electricity. Add to that the fact that they have to be running at full throttle and you have industrial type power consumption. The proliferation of mining farms in a region can therefore quickly create an electricity deficit in the latter for domestic consumption. Propelled to the rank of second cryptocurrency miner in the world, Kazakhstan has just had a bitter experience. Explanations.
A difficult status to assume
After their activity in China was banned, the miners chose to move their equipment to Kazakhstan, where electricity is cheap. This caused significant energy problems for the host country which began to suffer from power shortages in the summer of 2021. To fill this gap, some miners were even forced to buy electricity in Russia. Despite the difficulties faced by their colleagues there, a new wave of minors landed in Kazakhstan last month. So it followed an increase in electricity shortages which ended up pushing the local authorities to react.
Kazakhstan’s Energy Minister Magzum Myrzagaliev announced that the country’s government was studying the potential locations of a new nuclear power plant. He specified that two sites are currently being studied for the installation of a thermal power station which could help to fill the capacity deficit. Currently, around 70% of the country’s power plants run on coal. According to the Minister of Energy, the need to build a nuclear power plant is obvious. In fact, this is a ten-year-old project that should have been completed given that the country is the world’s leading uranium producer.
A financial return that is slow to manifest itself
Kazakhstan is currently in talks with the Russian company Rosatom, which has experience in building power plants abroad, especially in China and India. The construction would also help Kazakhstan achieve its goal of carbon neutrality by 2060. ” It should be understood that the construction of a power station, whatever it is, and in particular a nuclear power station, is not a quick affair. On average, it takes up to 10 years », Explained Mr Myrzagaliev.
While waiting for these achievements, the country has recorded almost no financial return following the massive arrival of minors on its territory. The situation had also prompted Kazakh President Kassym-Jomart Tokayev to take a measure aimed at forcing miners to pay additional charges for their electricity. The surcharge of one Kazakh tenge ($ 0.0023) per kilowatt hour has therefore been added to cryptocurrency mining operations in the country.
Faced with the local authorities’ difficulties in ensuring a stable supply of electricity, several miners decided to flee Kazakhstan. This time, they will have to make sure that they choose a destination where electricity is both cheaper and sufficiently available to meet their demand.
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Luc Jose Adjinacou
Far from having dampened my enthusiasm, an unsuccessful investment in 2017 in some crypto only increased my enthusiasm. I therefore resolved to study and understand blockchain and its many uses and to relay information relating to this ecosystem with my pen.