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The rapid expansion of Kazakhstan’s block reward mining business has burdened the country’s vulnerable coal-powered electrical grids, prompting questions about the country’s capacity and aptitude to handle the flood of corporations from China.

According to some reports, the 19-million-strong Central Asian nation has soon surpassed the United States as the world’s second-largest block reward mining destination.

The surge is mostly due to low electricity costs and a mass influx of block reward miners escaping China’s anti-mining crackdown. As a result, the country is now forced to import electricity and ration domestic supply in order to meet rising demand.

The old coal plants that power most local mining fields add to the government’s issues, hindering officials’ efforts to decarbonize the local economy. Kazakhstan has one of the greatest coal industries in the world.

Local officials have been caught off guard by the unexpected expansion and are rushing to figure out how to tax and control the primarily underground and foreign-owned industry. In June, a levy of one tenge ($0.0023) per kilowatt-hour was incorporated into the tax code. There are also plans to increase the cost of energy for miners.

Murat Zhurebekov, the country’s Deputy Energy Minister, announced earlier this month that the country intends to prosecute unregistered “grey” miners who operate unlawfully to avoid paying taxes and other expenses. According to some estimations, “grey” miners use twice as much electricity as the 600 MW legitimately recognized firms. Mining-related energy usage now accounts for roughly 8% of Kazakhstan’s overall generation capacity.

Minister Zhurebekov declared,

“I think we will have the directive (limiting power to unregistered miners) issued before the end of this year because this issue cannot be delayed any longer.”

Another aspect of block reward mining that is often forgotten is that its energy consumption will continue to climb as the BTC network protocols make it more difficult to process large blocks of transactions. The grid is under more stress as the impact of BTC mining grows to peak demand. This could result in an increase in electricity prices for the typical customer.

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