Countries look to nuclear power to mine BitcoinNovember 26, 2021
Kazakhstan is considering using nuclear power in the context of a power shortage due to the influx of Bitcoin miners from China.
President Kassym-Jomart Tokayev of Kazakhstan admitted that the country is in a severe shortage of electricity. After China banned cryptocurrency mining in May, Bitcoin miners quickly looked to other countries with cheap electricity, including Kazakhstan. Most of the major mining camps here mine Bitcoin.
According to the Cambridge Center for Alternative Finance, Kazakhstan is quickly ranking second in the world after the US in terms of total cryptocurrency mining. The hash rate increased from 8.8% in June to 18.1% now. Hash rate is a parameter that represents the computing power in cryptocurrency mining.
Fortune quoted President Tokayev as saying that the country had no other choice but to find nuclear energy to maintain daily operations, including cryptocurrency mining.
Since 2019, Kazakhstan has invested hundreds of millions of dollars to support cryptocurrency mining activities. The government believes that Kazakhstan’s abundant and cheap fossil fuel resources can attract miners and help increase revenue. Taxes from mining farms could contribute about $1.5 billion to government revenue over the next five years, according to an October report.
Attracting a large number of miners leaves Kazakhstan facing an energy shortage. Tokayev discussed the construction of a nuclear power plant in April 2019, but the public reaction was so intense that the plan was not implemented.
However, the power shortage came faster than expected. Since the beginning of this year, energy demand in Kazakhstan has increased by 8%, exceeding the average increase of 2% in previous years. Officials said the cause was the massive immigration of Chinese crypto miners.
Many parts of the country have been without power continuously since July. In mid-October, two large power plants in the northern region of Pavlodar had to stop working urgently due to overload. Kazakhstan’s Energy Ministry said it would have to import electricity from Russia to get through the cold winter.
According to Fortune, cryptocurrency miners are also gradually moving locations because of power shortages. On November 24, the company Xive announced to move a mining farm out of southern Kazakhstan.
Currently, Kazakhstan is still open to cryptocurrency mining. The government believes that illegal mining is the root of the energy shortage. They estimate illegal farms can consume twice as much electricity as properly registered farms. Therefore, instead of banning, the government of this country is looking to expand the scale of operations of places where many miners are concentrated.