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Kazakhstan block reward miners: High energy prices are killing us

Block reward miners in Kazakhstan have implored the country’s president to reduce energy prices as they threatened to shut down operations by the end of the year.

In a letter to President Kassym-Jomart Kemeluly Tokayev, the BTC mining firms claimed that the energy costs for miners in the Central Asian country are too high. The mining sector, once one of the world’s largest, “is in extremely dire straits,” the letter stated, as reported by local media outlets.

The appeal was signed by eight miners operating in Kazakhstan, including BCD Company LLP, Kinur Invest LLP, Green Power Solution Ltd, and KZ Systems.

“Today, all the largest representatives of the industry have suspended their activities and plan to completely cease their business in the Republic of Kazakhstan by the end of the year,” the miners stated in the letter.

Kazakhstan was once one of the biggest players in the BTC mining sector. In 2022, only the U.S. and China had a higher share of the BTC hashrate than Kazakhstan’s 14%. Then came a raft of new regulations that required miners to register with authorities, obtain a license, and sell 75% of the mined assets immediately. The new regulations also hiked the taxes on the energy supplied to miners, driving up the cost of electricity.

“As a result, our country lost its share of the global volume of digital mining from 14.03% in 2022 to 4% in 2023,” the miners said. This new tax regime “essentially destroys the industry and does not allow digital asset miners to optimize their activities in order to reduce costs. Up to 80% of the cost of digital asset mining is the cost of electrical energy.”

The Kazakh president previously stated that he intends to make the country a digital assets hub, with enabling regulations being the first step. However, the miners say that unless the power charges drop, this ‘crypto hub’ ambition will remain a pipe dream.