Ephemeral paradise – Bitcoin (BTC) mining companies operating in Kazakhstan had tasted the bitter experience of the nationwide internet shutdown in the country. While the destination was attractive for bitcoin mining, many factors could now encourage miners settled there to look to other more welcoming countries.
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From leader to loss of the podium: bitcoin hash rate falling in Kazakhstan?
Kazakhstan concentrated more than 18% of Bitcoin’s global hash rate in August 2021, ahead of the United States, according to the University of Cambridge Electricity Consumption Index (CBECI). The forced exodus of miners from China following the repression of the authorities against the sector has benefited Kazakhstan, which welcomed the exiles with open arms.
However, mining players consider that Kazakhstan is not not able to maintain its leading position. For Phillip Ng, head of the Soluna Computing data center, Kazakhstan will probably not represent “more than 10 to 15% of the global hash rate in the future”. He justifies these figures by citing a January report indicating that the country’s authorities are considering eliminate electricity subsidies which would therefore not be “viable”.
Origin Protocol co-founder Josh Fraser talks about the country’s heavy reliance on the oil and gas industry as a disabling factor:
“Countries that rely heavily on these energy sources for crypto mining could see a drop in hash rates due to price increases or state intervention”
For David Lesperance, managing partner and tax advisor at Lesperance & Associates, Kazakhstan may be less attractive for mining companies, which will have to face possible tax increase on the mining of cryptocurrencies by the authorities. An additional pressure for these minors “already frightened by the recent Internet shutdown”.
Will the next update of the University of Cambridge’s electricity consumption index indeed confirm the end of the leadership of Kazakhstan, which may not even be in the top three leading countries for bitcoin mining? ?
The outlook is pessimistic, but what will the reality be? Will mining giants like Canaan, which recently deployed in the country, really move in the next one or two years if the country’s attractiveness for the sector diminishes?
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