Russia is gearing up to provide additional energy to Kazakhstan to help the crypto mining companies that are operating in the Central Asian country.
Under the new arrangements, crypto miners in Kazakhstan will be able to purchase electricity directly from the Inter RAO, the power distribution and generation giant in Russia.
Energy from Russia
Crypto mining companies that are operating in Kazakhstan will be able to take advantage of electricity produced in neighboring Russia for powering their coin minting hardware.
In order to make this possible, the two countries will make amendments to a bilateral agreement, which applies to the coordinated operation of their respective energy systems.
The necessary changes have already been ordered by the government in Moscow and preparations have begun to organize the energy supply needed for powering the crypto mining activities of Kazakhstan.
As per the new arrangement, Russia’s Inter RAO will be able to sell energy in Kazakhstan under contracts directly with the crypto mining companies in the country with appropriate commercial terms.
The company has a monopoly on the import and export of electricity in the Russian Federation.
After the Chinese government initiated a crackdown against the crypto mining industry last year, Kazakhstan had seen an influx of mining companies because of its subsidized and low electricity rates.
This obviously meant that electricity consumption surged and it was deemed as the reason for the power shortages in Kazakhstan and the numerous breakdowns in the aging energy infrastructure.
Authorities in Kazakhstan had ordered the temporary shutdown of about 200 mining facilities back in January.
It was last fall that the state-owned Russian energy firm had first considered providing additional supplies to Kazakhstan.
This was when the energy deficit in the Central Asian nation was expected to reach 600 megawatts because of higher demand in the cold winter months.
The first nine months of last year had seen energy consumption in Kazakhstan reach 83 billion kilowatt-hours (kWh).
Inter RAO had leveled criticism at Kazakhstan at that time for capping tariffs and the Russian entity said that this had resulted in a shortage of funds needed for making investments in upgrading and modernizing the electricity generation capacities of Kazakhstan and its distribution network.
Moreover, Kazakhstan had also restricted its electricity imports previously, unless a risk of shortages was identified by their national grid operator, KEGOC.
Recently, lawmakers in Nur-Sultan have proposed a bill aimed at reducing what they say is the uncontrolled use of energy by ‘gray’ miners.
The purpose of the new legislation is to ensure that it is only registered mining companies have the opportunity of minting digital coins.
These companies have to be registered with the Astana International Financial Center (AIFC).
If the law is approved, then foreign companies would have to sign contracts with data centers that are licensed domestically in order to mine in the country.
Russia itself is also working on legislation for regulating the crypto mining industry in the country.