Chinese miners believe that Kazakhstan is not a Bitcoin mining paradise, like two years ago. Some leading Bitcoin mining operators are thinking about moving to the US or Russia to avoid going bankrupt.
Kazakhstan became the country with the highest Bitcoin hash rate in 2021 but is now inconvenient for the activity. According to Reuters, some leading mining operators are preparing to leave the Asian nation.
The report states that Bitcoin mining farm operators are afraid of the political instability and the threat of stricter regulations in Kazakhstan. For that reason, they are considering migrating to destinations like the US and Russia to reduce the risks of going bankrupt.
During the first week of 2022, Kazakhstan experienced massive protests that led the government to take extreme measures. They cut the energy supply and the Internet service, which kept mining nodes from connecting to the network. Consequently, there was an abrupt drop of 12% in the Bitcoin hash rate.
There are reports of the resolution of the situation in Kazakhstan and the withdrawal of the peacekeeping troops of the Russian Federation. However, Bitcoin miners believe that the development and stability of the mining industry are at risk in the country. They said that it is hard to estimate the actual costs and profits of the operation.
From Being a Bitcoin Mining Paradise to Becoming an Inconvenient Place
In 2021, many Chinese Bitcoin mining farm operators migrated to Kazakhstan. The government of China banned the activity, which led miners to seek opportunities in other countries. From May to August, the Kazakh territory concentrated a mining computing power of 21.9%, only surpassed by the US.
Chinese miner Vincent Liu said that Kazakhstan is no longer a Bitcoin mining industry paradise. However, the political environment and electricity service were stable only a couple of years ago. Miners reported that energy providers had cut energy to Bitcoin mining farms for up to 5 hours a day, for over four months.
In addition, Bitcoin miners must undergo strict regulatory control to operate in the country. In November, the congress of the Asian country approved a law that qualifies those involved in activities related to cryptocurrencies as subjects of financial monitoring. That implies that they must constantly inform the Kazakh authorities about the development of their operations.
Miners with minor operations in Kazakhstan are uncertain about moving to another country as they do not find it economically feasible. Those operators consider that there still seem to be exploitable advantages, with relatively low taxes, competitive labor, and technical costs compared to other regions.
The relevance of Bitcoin in the economic system has become increasingly evident, which cryptocurrency miners have not overlooked. Those involved in that activity have even started using renewable energy sources to reduce their CO2 emissions. However, many regulators continue attacking them, arguing that they affect the electric supply where they operate.
Bitcoin is trading at around USD 43,290 and has accumulated a 3.6% profit in the last seven days. Its daily trading volume is above USD 14.92 billion, and its market capitalization is about USD 815.54 billion, according to CoinGecko.
By Alexander Salazar