At least 106 Bitcoin (BTC) mining farms ceased operations in Kazakhstan, in what could be a state coup against the industry that is developing on a significant scale in that country, although without representing a major impact. The government audited the mining farms as a result of the energy crisis that the Asian nation is going through and seized several pieces of equipment.
In a Press release of the Kazakh financial agency, highlight that 51 mining farms apparently ceased their activities voluntarily. Another 55 farms, operating illegally, were dismantled.
It should be clarified that the raid against Bitcoin miners was ordered by the President of Kazakhstan (who has already shown resistance to the activity), the Financial Supervisory Agency and other government agencies. They called cryptocurrency mining farms “thorough inspections.”
The plants that decided to stop mining by their own decision “completely suspended work, dismantled the equipment and removed it from the deployment sites,” the government said.
Regarding those that were dismantled by government agents, they specified that they were operating without notifying the authorized body. Also, that they were illegally connected to energy sources without the necessary conditions to sustain the activity. And not satisfied, “they were unjustifiably located in the territory of special economic zones, and also evaded taxes and customs duties.”
“Today, all of them are disconnected from the power supply sources,” said the Financial Supervision Agency, which went on to say that there were cases where electricity was resold to miners. “In the Pavlodar region, two greenhouse companies sold their surplus electricity for mining to third parties without a license.”
Imported equipment, sometimes smuggled
The audit found that Bitcoin miners were imported from China, South Korea, Singapore, Turkey and Georgia. In some cases, as they indicated, it was smuggled.
They cited the case of the city of Almaty, where more than a thousand Bitcoin miners were imported directly from China, worth 2.8 billion tenge each ($5,400).
Overall, the government agency generated 25 criminal cases against the miners and seized some 67,000 mining equipment, valued at 100 billion tenge or USD 194 million.
The government excuses that the measures adopted “contribute not only to curbing the growth of electricity consumption, but also to freeing up energy capacities.” However, they state that illegal mining has given rise to “certain risks that represent a threat to the economic security of the country.”
Hashrate over 200 EH/s
The news about the dismantling of the hundred mining farms in Kazakhstan came at a time when the network processing rate (hashrate) was over 200 EH/s. In figures from Glassnode, the estimated hashrate of Bitcoin was at 209.47 EH/s during March 14, 2022.
While there has been no recent record of a drop in hashrate, it is plausible. This is taken into account that, since China’s ban, Kazakhstan has welcomed a large part of the miners, reaching 18% of the global hashrate. Although later his government moved against them, restricting their electricity, for example.
Those restrictive actions made the miners return to travel to other destinations, Russia, north of Kazakhstan, being one of these. That country concentrates 11% of the global hashrate, according to the mining map from the University of Cambridge. The figure has been maintained, despite the fact that, currently, the Russian nation is at war with Ukraine.
The truth is that, if the hashrate fell due to what happened to the Kazakh government, the miners that are still operating could benefit, especially because of the adjustment in difficultywhich, coincidentally, will happen in just under 330 blocks or two days or so.
Remember that if there are fewer miners participating in the network, less difficult it becomes to mine Bitcoin once the difficulty adjustment is madebecause that is how the self-regulation that guarantees the security of the network and the controlled emission of BTC works.