Russia to Supply Electricity to Kazakhstan’s Cryptocurrency Miners

Russia is preparing to provide Kazakhstan with additional energy needed to operate crypto mining farms in the Central Asian nation. New arrangements will allow Kazakhstan’s miners to buy electricity directly from the Russian power generation and distribution giant Inter RAO.

Crypto mining enterprises operating in Kazakhstan will be able to rely on electricity produced in neighboring Russia to power their energy-hungry hardware. To allow that, the two partnering nations will amend a bilateral agreement governing the coordinated operation of their energy systems.

The government in Moscow has already ordered the necessary changes and begun preparations to organize the supply of power for Kazakhstan’s crypto mining sector, the crypto news page of the Russian business information portal RBC unveiled.

In accordance with the new arrangements, Inter RAO, which holds monopoly on the export and import of electricity in Russia, will be able to sell in Kazakhstan under contracts concluded on commercial terms directly with the mining firms working there.

With its low, subsidized electricity rates, Kazakhstan attracted numerous mining companies after the Chinese government cracked down on the industry last year. The subsequent surge in consumption was blamed for the power shortages and multiple breakdowns of the country’s aging energy infrastructure. In January, Kazakh authorities temporarily shut down around 200 mining facilities.

The state-owned Russian energy giant first started considering additional supplies to Kazakhstan last fall, when the country was expecting its electricity deficit to reach 600 megawatts amid increasing demand during the cold winter months after consumption neared 83 billion kilowatt-hours (kWh) in the first nine months of 2021.

At the time, Inter RAO criticized Kazakhstan for its capped tariffs which the Russian holding said had led to lack of funds for investments in modernizing and upgrading the country’s generation capacities and distribution network. Also, electricity imports were previously restricted in Kazakhstan, unless the national grid operator KEGOC identified a risk of shortages.

Lawmakers in Nur-Sultan have recently proposed a bill aiming to reduce what they describe as “uncontrolled use of electricity by ‘gray’ miners.” The new legislation seeks to reserve the opportunity to mint digital coins only for mining companies registered with the Astana International Financial Center (AIFC). If the law is adopted, foreign entities would only be allowed to mine under contracts with domestically licensed data centers.

Do you think Kazakhstan will be able to solve its problems with power deficit and ensure sufficient electricity supplies for its crypto mining industry? Share your thoughts on the subject in the comments section below.