When Denis Rusinovich Maverick Group, a cryptocurrency mining company founded in Kazakhstan in 2017, thought he had hit the jackpot. Alongside China and Russia, the country had everything a bitcoin miner could want: a cold climate, old warehouses and factory armies where mining rigs could be set up, and – especially – dirty cheap energy to power the electricity-ghazal process. Cryptocurrency is created.
“It was a good opportunity,” Rusinovich said. When China outlawed cryptocurrency mining overnight in June, many of the country’s miners — who made up 60 to 70 percent of Bitcoin’s mining network at the time — made similar calls and quickly relocated to Kazakhstan, bringing about 87,849 mining machines home. , According to a Financial times Less than a year later, the initial rumor is history: miners are now facing frozen machines, popular unrest, and Russian troops roaming the country. And leaving is not an option.
Last week, chaos engulfed Kazakhstan as police cracked down on rising fuel prices in the south of the country, removing former President Nursultan Nazarbayev from his role as head of the Security Council and shutting down the Internet. Russian-led troops deployed under the command of CSTO, a military alliance of post-Soviet states, were deployed in the country. The impact of the shutdown on crypto mining was obvious – the Bitcoin network has so far lost 12 percent of its hashtags. Zaran Melrud, an analyst at cryptocurrency insight firm Arken Research, estimates that Kazakh mines alone could cost workers $ 7.2 million. For many miners, this was the latest in a series of unfortunate situations that have halted their activities for months. Those who were tempted to relocate to the country for lower electricity prices saw that its aging power grid was not ready to cope with the sudden influx of miners, leading to increased energy costs. The government has said the mining account 6 percent of the country’s capacity. Fighting blackouts and power cuts, the government announced in October 2021 that it would start supplying rationed power to registered miners and unplug them if the grid was under any pressure.
This means, at best, that cryptocurrency mining firms stop working during peak hours, when the general public begins to heat up due to the catastrophic winter. “From 6pm to 11pm -[the power providers] Sometimes the power goes out on our mining farms, “said Didar Bekbauv, founder of mining mining company Xive. “It simply came to our notice then. Hopefully, when winter ends in March, we’ll be fine. ” But in other cases, Rusinovich said, it was “no operation.” It’s not just a matter of losing profits – Rusinovich says miners lose “tens of millions of dollars” a month due to power outages, and Bekbauv says his mines are almost collapsing – but the shutdown presents an additional risk during the weather. In zero climate the condensation in the mining machine freezes instantly, potentially damaging the hardware. “[If the machinery is] Immediately shut down, if it is cold, it freezes hard, ”he said. Alan Darjeev, president of Kazakhstan’s National Association of Blockchain and Data Center Industries, said many miners had decided to pay extra for security during the protests to protect the frozen stock. “I’ve talked to all the mine owners, and they’ve said they’ve increased security for mining facilities – because the equipment is quite expensive,” he said. He said most of the mining farms were located in the energy-rich north of the country, far from turbulent.
So why are they still there? The answer is, brutally, they are stuck. All the other major countries with cryptocurrency mining infrastructure – Russia, Canada, and the United States – are jumping on the bandwagon. “It can’t be any worse – there’s just no space, no power,” said Alex Brammer, vice president of business development at mining company Luxor Tech. “The largest American publicly traded mining companies are having significant trouble getting their miners to plug in anytime in the next three to six months.”