Crypto miners operating in Kazakhstan are looking to the U.S. and Russia to grow their business as the government is restricting the industry in the central Asian country.
“The whole market [in Kazakhstan] has dried up so fast in terms of available capacity,” said Denis Rusinovich, co-founder of CMG Cryptocurrency Mining Group and Maverick Group, adding that he is looking into Russia to expand his operations.
Since flocks of miners from China and beyond soaked up Kazakhstan’s spare energy capacity, the goverment has been dealing with severe electricity shortages.
The government proposed a limit to the development of new mines of a total of 100 megawatts (MW) nationwide in October, setting an upper boundary for the potential of crypto mining growth in Kazakhstan.
Kazakh miner Didar Bekbau of Xive said his company is planning to visit the U.S. next year to look into developing mines there.
Mining platform BitFuFu simply turned off its machines in Kazakhstan, left them there, and is setting up new ones in the U.S. to deal with electricity rationing.
Bekbau said he thinks the regulatory environment in some U.S. states is conducive to their business, and that he felt it is unlikely they will be subject to the treatment they’ve had from Kazakh authorities.
Rusinovich said that Russia’s excess capacity and diverse energy sources are a great opportunity for miners. He said that there is some geopoltical risk associated with doing business there, but that miners who follow the right procedures and establish themselves are unlikely to face unfair treatment by the government.
Kazakhstan’s national grid operator KEGOC started rationing power to mines in September. One tactic several miners mentioned was that KEGOC would shut power off to crypto mines during peak demand hours so that cities could have adequate electricity.
After protest from the industry, the minister of energy said in November that they wouldn’t cut the power to legally-operating mines.
But they quickly broke that promise. Industry sources estimate that between 200MW and 500MW of lawfully operating mines had their power cut off in December, including some of Kazakhstan’s most established operations.
Later in November, Bekbau shut down a 2,500-rig mine in southern Kazakhstan that was operating legally, due to insufficient electricity, he told CoinDesk.
Despite the regulatory limitations, not all Kazakh miners have abandoned hope. Some think that if failing power plants come back online, KEGOC’s electricity rationing policy will improve. Others hope that if they develop their own renewable energy capacity, they will be able to start growing again.