What just happened? China's clampdown on cryptocurrency mining has impacted more than just the Asian nation. Cryptocurrency miners in Kazakhstan, many of whom came over from China, have caused a power crisis in the country, prompting its electrical grid operator to start rationing electricity.
The Financial Times reports that demand for electricity in Kazakhstan has risen around eight percent this year, much more than its usual average growth rate of one to two percent. The surge has led to power shortages, blackouts in six regions of the country since October, and shutdowns at three power plants.
Electrical grid operator KEGOC has now announced that it will be rationing electricity to 50 registered crypto miners. They will also be the first disconnected in the event of grid failures.
Kazakh officials say much of the increased power usage is the fault of "gray miners," unregistered crypto miners that operate from home or from factories. It's estimated that they are behind the consumption of 1200 megawatts (MW) of power from the country's power grid.
Starting next year, registered miners will be charged a compensation fee of 1 tenge (about $0.0023) to help with the situation and identify illegal miners. Kazakhstan is also looking at nuclear power as a way of meeting electricity demands, and has asked Russian energy company Inter RAO to contribute to the country's national power grid.
Little sad to shut down our mining farm in south KZ. Last container is ready to be sent. So much work, people, hopes are ruined. Country risk played out pic.twitter.com/J8ZMg6GeUI--- Didar (@didar_bekbau) November 24, 2021
Coindesk reports that Crypto mining company Xive shut down a 2,500-rig mine in South Kazakhstan recently due to a lack of sufficient energy supply. "It is clear that mining in south Kazakhstan is not possible anymore," co-founder Didar Bekbau told the publication.
The Times estimates that over 87,849 "power-intensive" mining rigs moved from China to Kazakhstan following the former's crackdown on mining and its declaration that all crypto transactions are illegal. However, some argue that miners are being made scapegoats for problems with the Kazakhstan's electricity grid.
Somewhere else that has seen an influx of crypto miners from China is Sweden. The energy consumption of Bitcoin mining in the Scandinavian country went up by several hundred percent between April and August. The environmental impact has prompted Sweden to call for a Europe-wide ban on all crypto mining.