• Kazakhstan’s share of the global Bitcoin mining hashrate was 4% in May 2023, down from its peak of 18% in October 2021.
• Regulatory changes have resulted in miners having to use expensive electricity imported from Russia and obtain licenses to operate.
• The new law requires miners to only use licensed mining pools and crypto exchanges, puts them last in line for power supply, and introduces a mining-related electricity tax.
Kazakhstan’s Bitcoin Mining Industry
Kazakhstan’s mining industry experienced rapid growth between 2020 and 2021, driven by cheap electricity, hosting demand, access to cheap Chinese machines, relaxed regulations, and tax benefits. This led the country’s share of the global Bitcoin mining hashrate to reach 18%, with its total Bitcoin mining load jumping to 1.5 GW in October 2021 from 200 MW a year and a half ago.
Unfortunately, the country’s energy provider was unable to handle this load and started rationing power supply to Bitcoin miners in September 2021. As a result, miners had no choice but to use expensive electricity imported from Russia which caused many miners to go bankrupt.
On April 1st 2023 the government implemented new regulations on digital assets which require miners to obtain licenses before they can operate and only use licensed mining pools or crypto exchanges. Additionally, these laws put miners last in line for power supply and introduce a mining-related electricity tax.
Impact on Mining Industry
It remains unclear what effect these new regulations will have on the country’s booming Bitcoin mining industry as high taxes could stunt growth while stability could help it expand further.
Kazakhstan has seen its share of the global Bitcoin hashrate drop significantly since October 2021 due largely due increased regulatory pressure which has made it difficult for miners to operate profitably within the country at this time. It is yet unknown how successful these efforts will be in curbing growth or providing stability for Kazakhstan’s growing industry moving forward.