The recent ban on crypto mining in China led to many interesting developments in many domains related to crypto. However, an unexpected by many is the decision made by the government of Kazakhstan, a CIS republic that shares common borders with China.
Millions of ASIC units were turned off after the enactment of the Chinese ban and many called this even “the Exodus”. While it is a little bit over-dramatic, the truth is that over 5 million machines are now offline. Some are on the second market waiting for new owners. Some are turned off as farmers hope that the ban will be reverted after the celebration of the 100th anniversary of the Chinese Communist Party.
However, thousands of machines are being moved to the US and neighboring Kazakhstan. Note that this nation has been another important hub for cryptocurrency mining since the dawn of the industry and the reaction of the government to raise prices for electricity for miners is not a surprise. Although, it is hard to imagine that the arrival of thousands of new machines is not a factor speeding up the process of introducing this new policy.
The Senate voted unanimously for a new additional fee of $0.0023 (1 Kazakhstani tenge) for one Kw/Hour of energy used to mine crypto. This measure will not be implemented immediately and farmers have time until January 1 2022 to continue paying as any other business. While the policy’s main goal is to ensure that crypto miners will not create unnecessary strains on the national electric grid, the officials in Kazakhstan claim that it will also bring out farmers who work without a license.
The decision will likely negatively affect the attractiveness of the investment options for Chinese miners. For example, one of the most prominent deals is the one initiated by Bit Mining. The plans of the corporation to build a 100 MW data center in 2021 were announced in May to start the project in July of 2021. In June, the company started moving their devices to the country as a reaction to the ban in China.
With each passing day, more miners from China consider moving to Kazakhstan. However, the electricity price increase may steer some of the investors away.