Kazakhstan’s Crypto Exodus: Major Mining Firms to Halt Operations Amid Skyrocketing Energy Costs

 Kazakhstan‘s cryptocurrency mining sector is on the brink of collapse. In an open letter, eight crypto mining companies have called on President Kasym-Jomart Tokayev to reassess the country’s punitive energy tariffs, according to happycoin.

Since the government restricted access to subsidized electricity, mining has become untenable. A new progressive fee scale has made costs prohibitive. As a result, many industry giants have suspended their operations and plan to exit Kazakhstan by year’s end.

These firms operate under licenses and comply with all regulatory requirements. Despite cooperating with the government to regulate the market, these companies find themselves beleaguered by onerous tax policies. This has led to a drastic decrease in Kazakhstan’s global crypto mining share. In 2022, it plummeted from 14% to a mere 4%.

One key issue is the floating electricity surcharge, which can reach up to 26 tenge (around $0.05) per kWh. Consequently, electricity costs consume nearly 80% of the revenue from mined digital assets.

Earlier, mining operations were blamed for the country’s electricity shortage. The ensuing harsh regulations have only accelerated the industry’s decline. As a case in point, Chinese mining giant Canaan shut down significant processing power as far back as July.
In sum, the ripple effect of Kazakhstan’s energy pricing policy has pushed the crypto mining industry into a corner. Firms that once cooperated with the government now find that the ground has shifted beneath them. If the current trends persist, Kazakhstan risks losing a once-promising sector to more favorable jurisdictions.