Kazakhstan Cuts Electricity For Bitcoin Miners Through January

Reports suggest that government officials in Kazakhstan are set to cut off the energy supply to Bitcoin miners until the end of January. The Kazakhstan Electricity Grid Operating Company (KEGOC) believes that this will help alleviate pressure on the national grid. 

The central Asian country’s electricity grid has struggled to cope with power demands, especially in winter. However, the KEGOC has stated that it will consider relaxing the restrictions if the energy situation improves.

Power Outages Becoming Increasingly Common in Kazakhstan

Kazakhstan has continued to face increasing power outages since the end of 2021 as the electricity demand skyrocketed. With more companies looking to expand their mining operations in the central Asian nation, it faces a crisis of sorts.

Kazakhstan has become a country of choice for crypto miners whose operations were disrupted by Beijing’s crypto ban. Due to its proximity to China and the cheap cost of electricity, the influx has put excess pressure on its national grid. 

The KEGOC revealed a significant emergency imbalance in the Central Asian power system. This resulted in a power surge in Kazakhstan’s North-East-South 500 kV power transmission line, severing it also. This caused the electricity supply to a substantial portion of southern Kazakhstan to be reduced. The total amount of load shed was approximately 1,500 MW

In November 2021, power outages in the country led to the government enlisting Russia’s help to boost its reserves. With the pressure temporarily alleviated, the officials are now taking a more rigid stance to prevent the continued repetition of outages.

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Concerns Raised Over Power Cut Effect On Global Bitcoin Hash Rates

The current power cut to mining firms has raised concerns about a possible ripple effect on Bitcoin’s hash rate among crypto enthusiasts. Reddit user u/timpi_kz asked about the impact of Kazakhstan’s miners experiencing a blackout over the remaining days of the month. 

He drew parallels to a similar occurrence earlier where the government shut down internet service across the country to quell protests over rising gas prices. The resulting drop in global hash rates coincided with Bitcoin’s price falling to $40,000.

These concerns seem valid, with Kazakhstan controlling about 21% of the global Bitcoin hash rate. According to Cambridge Bitcoin Electricity Consumption Index (CBECI), it currently ranks second behind only the USA and ahead of Russia.

The thread generated a clear divide, with many taking opposing views. Some comments claimed that the slump in price and drop in global hash rate was purely coincidental, with both metrics having no relationship.

Another Redditor countered this argument, suggesting a relationship between mining hash rates and Bitcoin’s price exists. He stated that selling pressure of the digital asset came about from miners who sell their cryptocurrency to pay their electric bills. He further pointed out that lower hash rates made it easier for them to mine and sell-off successfully.

Whatever the outcome, crypto observers will follow the development in Kazakhstan with keen interest.

Do you see the Kazakhstan officials going through with the power cut to mining companies? Let us know in the comments below.