Cryptominers use 50 MWh of electricity intended for other consumers in Kazakhstan.
Financial and law enforcement agencies in Kazakhstan have exposed a scheme for mining cryptocurrency using illegally obtained electricity.
Officials say the damage caused by the criminals exceeded $16 million, noting that the electricity sold to mining farms in the eastern part of the country could meet the energy needs of a small community.
Cryptominers in Kazakhstan consume 50 MWh of household electricity
Regional offices of the Financial Monitoring Agency (AFM) and the National Security Committee (NSC) of Kazakhstan in the East Kazakhstan region have stopped large-scale sales of electricity to mining companies in the region, local media reported.
Government authorities have established that over the past two years, local utility workers have been illegally selling electricity to mining companies that was originally intended for the population, social facilities and enterprises of strategic importance.
During this period, miners used more than 50 megawatt hours (MWh) to mine digital currencies, which is comparable to the energy consumption of a city with a population of about 50-70,000 people, the financial regulator said in a press release and a message on Telegram on Monday.
The AFM noted that, in accordance with the current legislation of Kazakhstan, mining farms are allowed to purchase electricity directly from the state platform managed by the Ministry of Energy, and in volumes not exceeding 1 MWh.
During the ongoing investigation, the regulator estimated that the value of the electricity illegally supplied to the cryptocurrency mining farms exceeded 9 billion Kazakhstani tenge (about 16.5 million US dollars). It also found:
“The organisers used the proceeds of crime to purchase two apartments in the capital and four vehicles, which were confiscated by court order with the possibility of seizure.”
Kazakhstan Still Has Cryptocurrency Mining Problems to Solve
Kazakhstan has become a hotspot for crypto miners since China banned Bitcoin mining a few years ago. Initially welcomed in the Central Asian country, mining companies have ended up causing growing power shortages and grid failures.
Since then, the government has taken steps to regulate the sector, including controlling energy consumption and taxation. In May, Deputy Minister of Digital Development Kanysh Tuleushin reported that almost $35 million in mineral extraction taxes had been collected over three years.
Astana authorities have also sought to ensure that cryptocurrency mined by miners can be sold on local platforms. Earlier this year, financial regulators proposed amendments to the law to legalize cryptocurrency trading by introducing a licensing regime for local exchanges.
In June, the National Bank of Kazakhstan backed a group of lawmakers to create a state reserve of digital assets. The monetary authority also gave its consent to the issuance of payment cards linked to cryptocurrency wallets.
Astana authorities have also announced plans to test payments using digital currencies in a special “pilot zone” called “Cryptocity.” The plan was presented by Kazakh President Kassym-Jomart Tokayev at an international forum in the capital this spring.
Kazakhstan is not the only country in the post-Soviet space facing difficulties in meeting the energy needs for cryptocurrency mining.
Russia, which legalized the industry in 2024, has been forced to temporarily restrict or completely ban its activities in more than a dozen regions, citing growing electricity shortages as the main reason.
In July, the Moscow Ministry of Energy was instructed to finalize the rules for organizations involved in the extraction of minerals. The draft rules propose toughening penalties for illegal connections to power grids and theft of electricity, as well as for violating restrictions on the extraction of minerals.
Under the updated regulatory framework, cryptocurrency mining companies will be classified as a new category of less important electricity consumers, allowing Russian authorities to remotely disconnect bitcoin farms from the grid during peak hours.
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Source: cryptonews.net
