The Financial Supervision Agency of the Republic of Kazakhstan reported on Tuesday that 55 illegal mining farms “voluntarily ceased their activity” due to a legal enforcement campaign by the regulator, and that another 51 operations “were considered closed”. The law enforcement operation focused on illegal mining farms that were endangering the country’s energy grid. In its statement, the agency called for a clear regulatory approach to cryptocurrency mining to be developed.
According to the statement, all the mentioned operators had not only frozen the mining process, but had also dismantled the platforms and removed them from the places of operation.
The statement mentioned several high-level business figures allegedly linked to the illegal activity. Among them, a former president of the state gas company Qazaqgaz, a former head of the drug control department of the national police and the 17th richest person in the country.
These operations were considered illegal because they had not informed regulators of their activity, had been illegally connected to the electricity grid, or had evaded paying taxes and customs. Some of the energy used by illegal miners should have been used for industrial production.
The agency seized more than 67,000 mining equipment valued at about $190 million and opened 25 criminal cases. The daily energy consumption in the country would have decreased by 600 MW/h after the enforcement raid.
The enforcement action is not a surprise, as Kazakhstan has been ramping up its efforts to reduce the burden that illegal cryptocurrency mining has been putting on its power grid. As of August 2021, the country was home to over 18% of the global BTC hash rate, but in February 2022 the national Ministry of Energy announced its strategy to identify and take non-compliant mining farms offline. normative.
This does not mean that the country is thinking of taking some kind of action against cryptocurrency mining. There are clear signs that the government is working on a sensible regulatory approach to help it take advantage of the new opportunities. As the press release of the Financial Supervision Agency says, “taking into account these developments, the interdepartmental working group is working on systematic decisions to regulate the problematic issues.”
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