BIT Mining, a Chinese crypto mining behemoth, has already scrapped some of its expansion ambitions in Kazakhstan.
According to industry experts, Kazakhstan, one of the world’s top Bitcoin (BTC) mining regions, is expected to lose its BTC hash rate share leadership in the upcoming hash rate distribution update.
Kazakhstan had almost 18 percent of the world’s Bitcoin hash rate in August 2021, second only to the United States, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI).
The enormous Chinese miners’ flight sparked by China’s cryptocurrency crackdown contributed to Kazakhstan’s BTC mining power growth. China’s BTC hash rate power contributed for more than 75% in 2019 before dropping to zero in August 2021.
However, despite major Chinese BTC mining companies such as Canaan and BTC.com transferring operations to Kazakhstan in 2021, numerous industry executives believe Kazakhstan will eventually lose its hash rate share owing to a variety of factors. As a result, Kazakhstan is likely to slide out of the top three BTC mining countries in the next CBECI report, which is scheduled in March.
According to Phillip Ng, vice president of corporate development at data centre startup Soluna Computing, bitcoin mining in Kazakhstan will eventually decline due to unsustainable power subsidies.
“We expect some mining to continue in Kazakhstan, but we don’t expect it to account for more than 10 to 15% of global hash rate in the future.” The reason for this is that Kazakhstan’s power subsidies are unsustainable,” Ng told. He highlighted allegations from January that Kazakhstani officials were considering reducing power subsidies in order to balance the country’s economy.
Kazakhstan’s reliance on the oil and gas industry, according to Origin Protocol co-founder Josh Fraser, is another cause for the country to lose its BTC mining leadership.
“Countries that rely significantly on those energy sources for crypto mining could witness a decline in hash rates due to increasing pricing or state interference,” Fraser said, highlighting the impact of continuing geopolitical tensions on oil and gas prices.
“Given the abundance of renewable energy and recent hash rate growth, I predict the United States, Canada, and Germany to raise their share of global hash rates slightly.” “I think Russia, Kazakhstan, and Iran are going to take a hit,” Fraser predicted.
Kazakhstan suffered substantial hash rate fluctuation in early January due to political turbulence, with the country’s ruling cabinet leaving and the government shutting down the internet for several days, as previously reported. According to David Lesperance, managing partner and tax counsel at Lesperance & Associates, political turmoil, probable energy price hikes, and increased crypto mining levies would all make Kazakhstan a less appealing environment for miners.
“With Kazakhstan considering boosting crypto-miner taxes, I believe that miners who were not previously alarmed by the recent internet outage will have yet another incentive to look for a better long-term site for their operations,” Lesperance said.
Crypto miners, he continued, must select a jurisdiction that fits a number of requirements for long-term success, including dependable green energy supplies with predictable long-term pricing, the rule of law to protect operations, a politically stable state, and so on.
Some Chinese crypto mining behemoths are already signalling a probable expansion halt in Kazakhstan. According to a Feb. 17 filing with the US Securities and Exchange Commission, BIT Mining, one of the top BTC mining businesses that shifted operations from China to Kazakhstan in 2021, is abandoning some of its crypto mining ambitions in Kazakhstan.
“Due to the uncertain local power supply,” BIT Mining claimed in the filing, “the Company has cancelled its data centre development plan in Kazakhstan, which was announced in May 2021.” The company also stated that it continues to operate BTC mining rigs in the country with a total hash rate capacity of 292.7 PH/s.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
