China’s ban on cryptocurrency had widespread implications. However, the biggest effect was indeed not in the lasting valuation of Bitcoin or other cryptocurrencies. On the contrary, the biggest aftermath was faced by countries where Chinese Bitcoin miners took refuge. While some countries like Singapore made the best of it, others suffered from the sudden spike in power demand. Kazakhstan is facing severe problems with managing its electric supply due to heavy usage by crypto miners. On top of that, most of this energy consumption is coming from illegal Bitcoin miners. While legal miners are registered and subject to revised taxation, illegal miners do not have to pay anything. The negative effect of it now falls on the common citizens of Kazakhstan.
Murat Zhurebekov is Kazakhstan’s vice president of the energy department, reported that at present over 8% of the total electrical consumption in the country is coming from illegal crypto miners. However, there is yet no concrete plan on how to deal with illegal miners.
After the China ban on crypto, Kazakhstan has remained the 2nd biggest contributor to Bitcoin hash rates in the world. The country has reportedly earned $1.5 billion in revenue from Bitcoin mining. The situation now resembles a double-edged sword. If Kazakhstan aggressively puts restrictions on mining, it would trickle down to legal miners. If they do not do anything, it would be near impossible to keep up with energy demands. It would be interesting to see how Kazakhstan comes out of this situation or fails to.
