- Kazakhstan became one of the leading providers of Bitcoin hashrates after China’s crackdown on the activities of miners.
- The country has struggled to cope with the influx of new miners into its borders, casting doubt on the future of Bitcoin mining in the country.
- Bitcoin hashrates reached an all-time high despite the hurdles that miners face globally.
During the summer of 2021, Kazakhstan was seen as a paradise for fleeing miners but this line of thought is giving way to a new narrative. While the option of a blanket ban is not on the cards, things have turned sour for miners that call Kazakhstan home.
Kazakhstan – From Eden To Wilderness
Prior to China’s crypto crackdown, Kazakhstan had a healthy number of Bitcoin miners, and the reports indicate that the hash rates stood at almost 10%. This figure doubled following the migration of miners to the country, sending it to the top of the charts for being one of the highest Bitcoin hashrate providers in the world.
The spotlight was shown on the country but it was lurching under pressure. Despite the claims that the country would make millions of dollars from taxation, things began to fall apart. Electricity supply suffered and blackouts became frequent and soaring temperatures led to increased demand for air conditioning.
The government’s reaction was swift. It limited the mining capacity for new mining centers to 100 megawatts and categorized miners as being either white or gray. Companies that were compliant with the rules were white while those operating without due licensing were gray. However, the distinction failed to help with the energy challenge and on 24th January, all miners were cut off from the electricity supply for the rest of the month.
It might seem as though Bitcoin hash rates were completely unaffected by the happenings in Kazakhstan. Barely a month later, Bitcoin hash rates climbed to 248.11 million terahashes per second which is over 50% from the levels prior to China’s blanket ban.
The Way Out
Miners have two clear paths before them: to migrate out of Kazakhstan to greener pastures or stay in the country with the hopes that regulations and infrastructure are improved. Jurisdictions like America offer miners a wholesome regulatory environment, access to capital markets but environmental concerns are given significant attention.
On the other hand, Kazakhstan could put its house in the order given the significant interest that it has received from mining countries around the world. According to one expert, “Kazakhstan will be a mining harbour in the long term. There is a huge potential for building new power generation. Both traditional energy sources and renewables. As long as the country has political stability and can attract foreign capital.”
While the road ahead may be tough and laced with higher taxes or sudden regulatory moves, there is little doubt that Kazakhstan will play a role in Bitcoin’s future.