Russia Supplying Kazakhstan with Electricity for Cryptocurrency Miners
Russia is looking to bolster Kazakhstan's energy demands in an amendment of the partnership between the two nations, as a means to provide electricity to miners within the former Soviet republic member state. The move comes amidst growing demand for electricity by crypto miners in Kazakhstan, as mining activities see an uptick.
The development was uncovered by Russian media platform RBC in a recent report. Per the report, the Russian government has demanded a modification of the binational energy agreements between the two bordered countries. This development follows the Russian government's order on the matter.
The amendment seeks to ensure the parallel operations of both countries' energy systems. As a product of the recently-engineered modification, Russia will be supplying sufficient energy to Kazakhstan especially for its cryptocurrency mining operations.
Russia seeks to facilitate this move through one of its largest energy-holding companies, Inter RAO. Inter RAO's relevance in this move is due to the fact that it serves as Russia's sole energy import-export contractor.
Russia's Inter RAO has entered into a commercial contract agreement with the Kazakhstan Electricity Grid Operating Company (KEGOC). The contract will ensure the supply of energy to Kazakhstan through on a purchase-and-sale basis between both companies and beyond.
Following China's crackdown on cryptocurrency mining operations within its territory, the East Asian country has seen an exodus of mining entities. In an effort to find a more conducive atmosphere, several mining entities trooped to Kazakhstan.
Notwithstanding, Kazakhstan is not without its issues. The Central Asian country has had its fair share of energy deterioration issues. Kazakhstan's growing energy predicament is indicative of the significance of the Russian partnership.
Following an energy crisis in Kazakhstan in January, the state energy company cut off several cryptocurrency mining companies – about 200 – from the country's power supply. Although this disconnection was temporary, it highlighted the delicate situation with the country's energy sector.
The Crypto Mining Industry in Kazakhstan
Despite this inauspicious indication, most crypto mining firms have remained in Kazakhstan, partly due to the country's recent lax attitude towards these entities. As Kazakhstan looks to address its energy situation, the country might, however, adjust its approach at regulating mining firms.
Last week, Kazakhstan presented its first draft law on cryptocurrency mining to check the industry within the country. The deputies of the lower house of Kazakhstan's parliament, the Mäjilis, presented a bill in this regard.
Within the bill, the house acknowledged the significance of crypto mining to the broader economy of Kazakhstan. Nonetheless, there was a consensus that despite its importance, the industry is largely unregulated in Kazakhstan.
While the country has a legislation that requests the registration of crypto mining firms, this registration exercise is voluntary. As a result, several firms have taken to bypassing the exercise.
This lack of proper oversight has led to an indiscriminate use of Kazakhstan's energy for crypto mining, contributing to the country's energy situation. Consequently, the house seeks to propose stricter measures and a proper surveillance of the industry.