Kazakhstan is considering turning to nuclear power to address the issues faced by the power grid due to the influx of Bitcoin miners into the country after the Chinese ban on cryptocurrencies.
The exodus of miners from China to Kazakhstan has led to a significant crisis in the latter’s power grid, with mining operations eating up a significant chunk of energy.
An 8% Increase In Consumption
Kazakhstan has seen a significant jump of 8% in domestic electricity consumption in 2021, a jump that has been attributed to the influx of Bitcoin miners from China. According to data sourced from the Financial Times, Kazakhstan has received 87,849 Bitcoin mining rigs from Chinese companies during the current year. This follows China’s crackdown on crypto, and we could see that number increase.
The increase in consumption has seen a significant deficit in the power grid, leading to an irregular power supply and unreliable electricity services, compounding the issues faced by the local population.
The Nuclear Solution
The President of Kazakhstan, while meeting with bankers on the 19th of November, mooted the idea of a nuclear power plant to address the stress currently being placed on the country’s power infrastructure. Speaking with the bankers, the President stated,
“Looking into the future, we will have to make an unpopular decision about the construction of a nuclear power plant.”
Nuclear power remains quite unpopular in Kazakhstan, with the country’s only nuclear power plant closing its doors in 1999. Although Kazakhstan produces around 41% of the world’s Uranium supply, citizens remain cagey about nuclear power after years of atomic weapons testing under the Soviet Union.
Despite the uneasiness of the population, Presiden Tokayev remains keen on a nuclear solution and had also suggested a referendum on the issue a couple of years ago. Speaking at a Russian business forum, the President stated,
“I myself believe that it’s time to substantially consider this issue since Kazakhstan needs a nuclear power plant.”
Risk Of Jeopardizing Significant Tax Revenue
While President Takoyev did not link the proposed nuclear power plant to Bitcoin miners or mining operations, Takoyev also realizes that if Kazakhstan failed to keep Bitcoin miners in the country, it could risk losing around $1.58 billion in tax revenue generated by mining operations.
The power shortages have already started showing their impact, with the leading Bitcoin marketplace Xive wrapping up its operations in the country. In a tweet, the co-founder of Xive, Didar Bekbau, stated that he decided to shut mining operations in Kazakhstan due to “restricted electricity supply from the power grid.”
Newest Major Bitcoin Mining Hotspot
Kazakhstan has seen a huge influx of miners from China, and as a result, the country’s hashrate has quadrupled to more than 18%, and in August, Kazakhstan became the second-largest Bitcoin mining location in the world, behind only the United States of America, which accounts for over 35% of the world’s BTC mining operations.
However, Kazakhstan has also faced several challenges while trying to live up to its position as the second-largest center of BTC mining operations in the world. Back in October, Kazakhstan’s largest coal-fired power plant went offline, with the Kazakhstan Electricity Grid Operating Company (KEOC) blaming Bitcoin miners for the outage.
However, from 2022, BTC miners in Kazakhstan will need to pay a premium for power, with the new tax adding one Kazakhstani tenge per kilowatt-hour consumed.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.