Illegal Bitcoin Mining Is Growing in Tajikistan and Kazakhstan
According to Tajikistan's Prosecutor General, Habibullo Vohidzoda, unauthorized cryptocurrency mining caused damages of $3.52 million in the first half of the year.
At a press conference, Vohidzoda noted that this damage was caused by the illegal use of electricity by miners, while energy companies receive compensation from the state.
“There are individuals who import mining equipment from abroad and illegally mine cryptocurrency,” Vohidzoda added, noting that four to five criminal cases have currently been opened regarding the use of mining equipment.
His statements follow similar ones from the Sughd regional prosecutor's office, which is investigating seven cases in which 135 mining devices were found in residential buildings, causing damages of just over $30,000.
While cryptocurrency mining is considered neither legal nor illegal in Tajikistan, it occurs in the context of broader issues with illegal and unpaid electricity use in the Central Asian country.
Since January, 190 criminal cases have been opened on this issue, involving 3,988 people, and the amount of damages currently sought is US$4.26 million.
The Problem of Illegal Cryptocurrency Mining in Central Asia
Tajikistan is not the only country in Central Asia facing a growing cryptocurrency mining problem: authorities in Kazakhstan recently shut down a cryptocurrency mining scheme using illegally obtained electricity.
The Financial Monitoring Agency and the National Security Committee of Kazakhstan, as a result of joint actions, established that employees of local energy companies provided mining organizations with more than 50 megawatt-hours (MWh) of electricity intended for domestic and commercial needs over a two-year period.
This is equivalent to the energy consumption of a city with a population of 50,000 to 70,000 people.
Kazakh authorities also said the stolen electricity was worth approximately $16.5 million, and that the scheme's mastermind used the proceeds to buy two apartments and four cars, which are now subject to confiscation.
As in Tajikistan, cryptocurrency mining is not strictly prohibited in Kazakhstan, but authorities are seeking to limit its impact on the country's energy system.
A recently passed law states that mining farms can only purchase electricity from the Department of Energy and cannot purchase more than 1 MWh or less.
The measures are aimed at curbing a sector that has grown significantly since China banned cryptocurrency mining in 2021. However, the combination of low costs and inconsistent enforcement in Central Asia makes the region attractive to miners.
“We have previously seen an increase in mining activity in Kazakhstan after China kicked out miners in 2021,” Digiconomist founder Alex de Vries told Decrypt . Given the country’s proximity to China and “favorable conditions,” including the rising price of Bitcoin , “these regions could be attractive to Chinese miners,” he added.
China and Russia?
Not only Chinese miners, but also their Russian colleagues can develop the mining sector of Central Asia.
That's according to Ari Redbord, director of global policy and government affairs at TRM Labs, who told Decrypt that sanctioned Russian actors have begun to exploit parts of the Central Asian crypto ecosystem in recent years, particularly in Kyrgyzstan.
“Given the close interconnection of the region’s financial and cryptocurrency infrastructure, illicit mining activity in Kazakhstan or Tajikistan could leverage the same cross-border networks, counterparties, and liquidation routes already used to evade sanctions,” he noted.
China's example may be instructive for countries like Kazakhstan and Tajikistan, as Alex de Vries points out that even after a comprehensive ban, China continues to exert significant influence on Bitcoin mining.
“According to the Cambridge Mining Map, their share has fallen from almost 50% to 20%,” he said. And while bans have a “strong impact,” he added, even with a total ban on mining, “it’s hard to eliminate it completely.”
As recent cases in Tajikistan and Kazakhstan show, smaller-scale operations can continue to operate without due attention, especially in environments with weak oversight and enforcement.
“Central Asia offers a combination of relatively inexpensive energy, limited regulatory oversight and, in some cases, a vague legal framework for mining,” Redbord said. “These conditions create opportunities for illegal operators to engage in large-scale unlicensed mining operations.
Source: cryptonews.net
