Kazakhstan's new rules require crypto miners to make disclosures before starting operations

• The new rules will give the control a level of insight into the mining business, which can be used to predict power needs.
• Kazakhstan’s power grids have been stressed by the increased need for power coming from crypto mining.
• The country accounts for just over 18% of the world’s total Bitcoin mining hashrate.

Kazakhstan, which has become one of the hubs for crypto mining since China ousted miners last year, is taking a tough new stand on crypto miners. The country hasn’t banned mining, but is instead imposing strict reporting requirements of mining firms, with respect to the amount of electricity they consume.

According to an order, published by the Ministry of Digital Development earlier this week, the new rules will compel crypto mining businesses to give 30 days notice to the government before they begin operations.

They will also be required to submit technical specifications of how they connect to the power grid before they commence operations, which will presumably allow power generating firms to gauge demand a month in advance. Mining farms consume a significant amount of power and can put grids under pressure if they aren’t prepared.

Further, the order also directs miners to report the amount and type of mining equipment that they will use before operations begin in a farm.

The government also wants to know what investments the company has planned in Kazakhstan for the next 12 months, and the legal entity operating the mining operation will also have to be based in the country. Together, these two means could help the government put more pressure on miners to be beneficial for Kazakhstan’s own economy.

The government evidently wants to have a measure of control on these miners, and the order asks them to report contact information, along with physical and IP addresses of their operations. This information must be updated on a quarterly basis, and companies will have to provide prior notices if they’re winding up operations as well.

To be sure, Kazakhstan’s government doesn’t want to oust or estrange crypto miners. On the contrary, it wants them within its borders.

In August last year, the country’s Data Center Industry and Blockchain Association (NABDC), said that the mining industry could provide a $1.5 billion boost to its economy in the next five years.

The country also accounts for a significant part of the global mining hashrate. According to the University of Cambridge’s Bitcoin tracker, Kazakhstan accounted for just over 18% of the total computing power used for powering Bitcoin mining around the world, as of August 2021.

However, this has also stressed the country’s power grids, which were already stressed before miners started flooding the country. In a meeting on November 19 last year, Kassym-Jomart Tokayev, the President of Kazakhstan, told bankers that a nuclear power plant could ease the impact on grids, pushing a country that has a long history of nuclear debacles to once again consider the medium.

There have also been proposals for hiking power prices and increasing taxes for crypto miners doing business in the country.
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