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Kazakh Government Cracking Down on Crypto Miners

Dozens of mining facilities have ended operations, either voluntarily or by force.

Kazakh Government Cracking Down on Crypto Miners
Shutterstock photo by evgenykz

Key Takeaways

  • Dozens of crypto mining facilities in Kazakhstan have shut down, according to the country's Financial Monitoring Agency.
  • So far, 55 mining facilities have voluntarily ceased operations, while 51 illegal mining facilities have been forcibly shut down.
  • The shutdowns are related to Kazakhstan's energy shortage, which led the country to impose restrictions on mining in late January.

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Crypto mining businesses in Kazakhstan are being shut down en masse, according to a statement from the country’s authorities.

Dozens of Kazakhstan’s Facilities Shut Down

Kazakhstan’s Financial Monitoring Agency (FMA) reported on Mar. 15 that dozens of crypto mining operations have been shut down within its borders—some voluntarily, others less so.

So far, 55 mining facilities have voluntarily ceased operations following inspections by the government. Those facilities also dismantled and discarded their equipment. Government agencies will prevent that equipment from entering circulation.

The FMA also reported that 51 illegal mining facilities were forcibly shut down. Those illegal operations either did not report their activity to the government, used illegal energy connections, operated in improper special economic zones, or evaded taxes and customs. These facilities were disconnected from power sources.

The authority has filed 25 criminal cases and seized 67,000 pieces of equipment valued at 100 billion tenge ($194 million).

Energy Shortage Motivated Shutdowns

In today’s announcement, the FMA said that illegal activities in the cryptocurrency mining industry “pose a threat to [Kazakhstan’s] economic security.” Namely, it warned that mining increases the risk of supply failures and energy shortages.

Kazakhstan began to block cryptocurrency mining beginning in late January due to widespread electrical shortages.

The actions taken against the country’s mining facilities have reportedly reduced energy consumption by 600 megawatts/hour.

The FMA also expressed opposition to cryptocurrency on the grounds that the technology poses “significant threats to the financial system and the well-being of citizens.” It expressed concerns that crypto can be used to finance terrorist activity, weapons trading, and the drug trade.

Elsewhere, Kazakhstan’s National Blockchain and Data Center Industry Association suggested that the harsh policies have caused an exodus, with one-third of legitimate mining companies leaving the country.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.

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