This means that, at best, cryptocurrency mining farms stop working during peak hours, when the general population turns on the heating due to the inclement winter. Grappling with blackouts and power cuts, in October 2021 the government announced it would start rationing power supply to registered miners and unplug them if the grid came under any stress. The government said mining accounts for 8 percent of the country’s capacity. Those tempted to relocate to the country for its low energy prices had found that its aging power grid was not prepared to handle the sudden influx of miners, which caused a spike in the consumption of energy.
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For many miners, that was just the latest in a series of unfortunate circumstances that had dogged their operations for months. Jaran Mellerud, an analyst at cryptocurrency insights company Arcane Research, estimates that the shutdown alone, which added up to about 100 hours without nation-wide connectivity over six days, might have cost Kazakh miners around $20 million, or $4.8 million for every 24 hours with no internet. The shutdown’s impact on crypto mining was evident-the Bitcoin network lost 12 percent of its hashrate. Russian-led troops acting under the orders of the CSTO, a military alliance of post-Soviet states, were deployed to the country. Last week, chaos engulfed Kazakhstan as protests in the south of the country over a spike in fuel prices resulted in police repression, the removal of former president Nursultan Nazarbayev from his role as head of the security council, and an internet shutdown.
Less than a year later, the initial buzz is history: Miners are now being confronted with frozen machines, popular unrest, and Russian troops roaming across the country. When China outlawed cryptocurrency mining overnight last June, many miners based in the country-which at the time made up between 60 and 70 percent of Bitcoin’s mining network-made the same call and hastily relocated to Kazakhstan, bringing to the country as many as 87,849 mining machines, according to a Financial Times estimate.
“That was a good opportunity,” Rusinovich says. Next door to China and Russia, the country had everything a Bitcoin miner could ask for: a cold climate, legions of old warehouses and factories where the mining rigs could be installed, and-especially-dirt cheap energy to power the electricity-guzzling process through which cryptocurrency is minted. When Denis Rusinovich set up cryptocurrency mining company Maveric Group in Kazakhstan in 2017, he thought he had hit the jackpot.