* The shutdown of the Internet has moved data centers offline
* The government is also considering stricter rules in mining
* Some large bitcoin miners want to move abroad
* Kazakhstan’s mining industry is the second largest in the world
LONDON, Jan. 14 () – According to some major miners seeking to leave the global crypto hub after last week’s internet outage, Kazakhstan may no longer be a sanctuary for previous bitcoins. and intensified fears of tightening regulation.
The closure of the government website during the riots in the country, the world’s second-largest mining hub, reduced bitcoin’s global computing power by about 13% as data centers used to generate cryptocurrency went offline.
Alan Dorjiev of the National Association of Blockchain and Data Center Industries in Kazakhstan, which accounts for 80 percent of the country’s legal mining companies, says most crypto producers have now returned to the Internet.
For the fast-growing cryptocurrency industry, the resumption of operations could lead to problems, according to four major miners, with some saying they or their clients may be looking for other countries to operate.
The disruption of the internet has raised concerns about the sustainability and prospects of the business as government control grows, miners say.
Vincent Liu, a miner who was relocated from China to Kazakhstan to take advantage of the country’s cheap energy, said the changing environment had prompted him to shift operations to North America or Russia.
“Two or three years ago, we called Kazakhstan a mining paradise because of its stable political environment and stable electricity,” Liu said.
“We are assessing the situation … I think we will keep some of the hashtags in Kazakhstan and transfer some of them to other countries,” he said.
Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete with others connected to a global network to solve complex mathematical puzzles. The process consumes electricity and often runs on fossil fuels.
Kazakhstan ranked 2nd in the world in bitcoin mining after the U.S. last year, and the former world leader attracted a large influx of miners from China and orders for data centers after Beijing suppressed the industry.
In August, Kazakhstan’s share of ccaf.io/cbeci/mining_map accounted for 18% of the global hashrate – crypto jargon for computing power used by computers connected to the bitcoin network. That was 8 percent more than in April, when Chinese miners replaced cars and bought power at Kazakh data centers.
Kazakhstan’s crypto-mining farms are largely powered by aging coal plants, which is a headache as governments seek to decarbonize the economy. Energy-hungry miners have forced the former Soviet state to import electricity and include domestic products in its diet.
The government is now considering how to tax and regulate the underground and overseas industries. Last year, he said he planned to fight unregistered “gray” miners, who could consume twice as much energy as “white” or officially registered miners.
Din-muhammed Matkenov, one of the founders of cryptocurrency maker BTC KZ, said the influx of Chinese miners had exacerbated the problem of power-swallowing for local miners. Customers can move to the U.S. and Russia, he said.
“We believe that the development and sustainability of the mining industry in Kazakhstan is under threat,” Matkenov said, adding that the company has three data centers in Ekibastuz, in northern Kazakhstan, which manage more than 30,000 mining facilities. The patched power supply has complicated the company’s business, he added.
“It’s very unstable and it’s really hard to predict the benefits of paying for electricity and wages. At the moment, we are on the verge of bankruptcy and customers are trying to find other countries where they can move with a stable government decision. ”
The Kazakh Energy Ministry did not immediately respond to a request for comment.
However, Kazakhstan’s relatively low taxes, manpower and equipment still offer advantages, the four miners said. Matkenov noted that electricity costs at least $ 0.03-0.04 per kilowatt, which is similar to the US and less than $ 0.05 in Russia.
“Kazakhstan has ease of doing business, which allows well-capitalized projects to be launched faster than in the West,” said Mike Cohen of Canadian miner Pow.re.
“Those who want to operate in the region are more tolerant of geopolitical risk and will not be deterred by fossil fuel-based energy sources.” (Tom Wilson’s London Report; Tamara Vaal’s Additional Report on the Light Sultan; Edited by Pravin Char)