Bitcoin mining in China is growing down steadily due to the government ramping up its crackdown on it. While this has created a big vacuum in the global crypto mining scene, much of mining activity is quickly shifting to other countries including Iran, United States, and Kazakhstan. And it looks like those countries are ramping up their average crypto mining rate.
A 2021 study by the Cambridge Bitcoin Electricity Consumption Index has found out that Kazakhstan is currently the third-largest producer of Bitcoin processing power in the world behind China and the United States.
China’s share of global bitcoin mining power declined from 75.5 percent to 46 percent over the months of May and June. During the same period, the global mining share of Kazakhstan rose from just 1.4 percent to 8.2 percent. This is due to a couple of reasons.
Unlike other countries where the legal status of cryptocurrencies remains uncertain, Kazakhstan created a relatively comprehensive legislative environment to attract investors. Crypto mining is legal in Kazakhstan. Investors have to take approval from the National Security Committee and notify the Ministry of Digital Development. Kazakhstan treats cryptocurrencies as property. However, the government doesn’t treat it as a means of payment.
On the other hand, Kazakhstan has allowed tax-free import of crypto mining equipment so Chinese miners can have a convenient fallback location.
Through all this, Chinese investors introduced $10 million of investment capital into the construction of crypto farms in the country. Moreover, Kazakhstan also has a lower average cost of energy making it a suitable spot for crypto miners. Also, the crypto miners can maximize their profits with lower electricity costs which they can use again in buying more ASICs for crypto mining.
Kazakhstan is reliant on fossil fuels for more than 90% of the nation’s electric supply. Out of that 90%, coal power contributes 70%, Natural gas provides 20%. Unfortunately, Renewables provide only 1.4% of the country’s energy supply.