Kazakhstan's financial and law enforcement authorities have unraveled a scheme to mine cryptocurrency using illegally procured electricity.
The losses caused by the perpetrators would be more than $16 million, officials said, and the energy sold to mining farms in the country's eastern region may have met the needs of small cities.
Kazakhstan Crypto Miner Burns 50 mWh of Household Electricity
The regional divisions of Kazakhstan's Financial Watchdog (AFM) and the National Security Board (KNB) have put an end to large-scale electricity sales to local mining companies, local media reported.
Two government agencies have established over the past two years that local utility employees have illegally sold mining companies' electrical energy to businesses of their own population, social facilities and strategic importance.
Miners used 50 megawatt hours (MWH) to mint digital coins during a period that rivals the energy consumption of a city with approximately 500,000 residents.
In accordance with Kazakhstan's current law, mining farms are permitted to purchase electricity from state-run platforms operated by the Ministry of Energy only from state-run platforms operating at less than 1 MWh.
In an ongoing investigation, regulatory bodies estimated that electricity illegally supplied to crypto mining farms would cost more than 9 billion Kazakhstanitenge (approximately $16.5 million). Also revealed:
“The organizers used detective proceeds to purchase two apartments and four vehicles in the capital.
Kazakhstan has not yet resolved the issue of crypto mining
Kazakhstan has become a magnet for cryptocurrency miners after China's decision to enforce a Bitcoin mining ban several years ago. Mining companies, initially welcomed by Central Asian countries, were eventually condemned for the country's growing power failures and grid failures.
The government has since taken steps to regulate the sector, including its power consumption and taxation. In May, Deputy Minister of Digital Development Kanysh Tuleushin announced that the state had collected nearly $35 million in mining taxes in just three years.
Authorities in Astana also tried to confirm that miners would sell cryptos created on domestic platforms. Earlier this year, financial regulators proposed legislative reforms to legalize cryptocurrency transactions by adopting a licensing system on local exchanges.
In June, the National Bank of Kazakhstan created a state-controlled reserve for digital assets in support of the initiative of the MP group. The monetary authorities also lit green on the project that issues payment cards linked to crypto wallets.
Officials in Astana also said they would like to test payments in digital currency in a special “pilot zone” called “Cryptocity.” The plan was announced by Kazakh President Kasim Jomat Tokayev at an international forum held in the capital this spring.
Kazakhstan is not the only country in post-Soviet space when it comes to dealing with the energy needs of crypto mining.
Russia, which legalized the industry in 2024, has been forced to temporarily limit or permanently ban activities in more than a dozen regions, citing an increase in energy shortages as a main reason.
In July, Moscow's Energy Ministry was tasked with finalizing regulations for entities engaged in mining. The draft rules include harsh penalties for illegal connections to distribution networks and power theft, as well as violations of mining restrictions.
Under the updated regulatory framework, crypto mining facilities will be added to a new category of less important electricity consumers, allowing Russian authorities to go out of Bitcoin farms remotely at peak times.
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