Russia is preparing to provide Kazakhstan with additional energy needed to operate crypto mining farms in the Central Asian country. The new arrangement will allow Kazakhstani miners to purchase power directly from Russian power generation and distribution giant Inter RAO.
Kazakhstani miners will be supplied with energy from the Russian Federation
Crypto mining companies operating in Kazakhstan will be able to rely on electricity produced in neighboring Russia to power their energy-hungry hardware. To make this possible, the two partner countries plan to amend a bilateral agreement governing the coordinated operation of their energy systems.
The government in Moscow has already ordered the necessary changes and has begun preparations to organize the supply of electricity to Kazakhstan’s crypto mining sector, the crypto news page of the Russian business information portal RBC has revealed.
Pursuant to the new arrangement, Inter RAO, which has a monopoly on the import and export of electricity in Russia, will be able to sell it in Kazakhstan under a contract signed on direct commercial terms with a mining company working in Kazakhstan.
Kazakhstan attracted many mining companies with subsidized, low electricity rates following a crackdown by the Chinese government last year. A subsequent surge in consumption was blamed for power shortages and multiple breakdowns in the country’s aging energy infrastructure; in January, Kazakh authorities temporarily shut down about 200 mining facilities.
State-owned Russian energy giants first began considering additional supplies to Kazakhstan last fall, when consumption approached 83 billion kilowatt-hours (kWh) in the first nine months of 2021 and power shortages were expected to increase as demand increased during the cold winter months to 600 megawatts, when it was expected to reach 600 megawatts.
At the time, the Inter RAO criticized the Russian holding company, saying that Kazakhstan’s capped tariff system was insufficient to fund investments to modernize and upgrade the country’s generation capacity and distribution network. In addition, Kazakhstan had previously been restricted from importing electricity unless the power system operator, KEGOC,identified the risk of shortages.
Nurstan lawmakers recently proposed a bill aimed at reducing what they describe as “uncontrolled power use by ‘gray’ miners.” The new law seeks to ensure that only mining companies registered with the Astana International Financial Center (AIFC) have the opportunity to mint digital coins. If adopted, the law would allow foreign companies to mine only under contract with a domestically licensed data center.
Do you think Kazakhstan can solve the problem of power shortages and ensure adequate power supply for the crypto mining industry? Share your thoughts on the subject in the comments section below.
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