As a result of the collaboration between the two countries, Russia intends to increase Kazakhstan’s energy needs to provide electricity to the former Soviet republic’s miners. The move is in response to a rise in the demand for power among crypto miners in Kazakhstan as mining operations increase.
Russian media outlet RBC found the development in a recent investigation. According to the article, the Russian government has sought changes to the bilateral energy agreements between the two neighbouring nations. This development is under the Russian government’s directive on the issue.
The amendment intends to secure the simultaneous operation of the energy networks of both nations. As a result of the newly implemented adjustment, Russia will provide Kazakhstan with sufficient electricity for its crypto mining activities.
Russia intends to ease this transition through Inter RAO, one of its primary energy holding firms. Inter RAO is significant in this transaction since it is Russia’s sole import-export contractor for energy.
Inter RAO of Russia has signed a commercial contract with Kazakhstan Electricity Grid Operating Company (KEGOC). The arrangement will guarantee Kazakhstan’s energy supply on a purchase-and-sale basis between both parties and beyond.
After China’s crackdown on cryptocurrency mining activities within its borders, mining organisations have fled the East Asian nation. Several mining enterprises flocked to Kazakhstan in search of a more favourable environment.
Despite this, Kazakhstan is not devoid of problems. The nation in Central Asia has experienced its fair share of energy degradation problems. Kazakhstan’s worsening energy situation demonstrates the relevance of the Russian alliance.
In January, due to an energy crisis in Kazakhstan, the national energy firm disconnected over 200 bitcoin mining operations from the country’s power grid. Although this outage was short, it exposed the precarious state of the nation’s energy industry.
The Cryptocurrency Mining Sector in Kazakhstan
Crypto mining sector in Kazakhstan. Image: Pavel Mikheyev/Reuters
Despite this ominous sign, most crypto mining companies have stayed in Kazakhstan, thanks partly to the country’s recent lenient stance toward these enterprises. As Kazakhstan handles its energy predicament, the nation may alter its approach to regulating mining companies.
Kazakhstan introduced its first crypto mining legislation draft last week to regulate the sector. The Majilis, the lowest house of parliament of Kazakhstan, introduced a measure in this respect.
Within the law, the house emphasised the importance of cryptocurrency mining to Kazakhstan’s economy. However, there was unanimity that the sector in Kazakhstan is mostly uncontrolled.
Although the government has a law mandating the registration of crypto mining enterprises, registration is optional. As a result, numerous businesses have begun to circumvent the procedure.
This lack of regulation has resulted in the indiscriminate use of Kazakhstan’s electricity for crypto mining, contributing to the country’s energy predicament. As a result, the house intends to propose tighter restrictions and adequate industrial monitoring.