Kazakhstan’s Illicit Electricity Supply for Cryptocurrency Mining
Kazakhstan’s government has recently exposed a significant illicit operation involving electricity firms that were illegally supplying power to cryptocurrency mining operations. Following an investigation spearheaded by the Department of Financial Monitoring (DFM) in the East Kazakhstan region and supported by the National Security Committee (NSC), authorities reported that around $16.5 million (or approximately 9 billion tenge) worth of electricity was misappropriated.
Legislative Framework and Violations
Under existing legislation, notably the Digital Assets, Informatization, and Amendments to Certain Legislative Acts (No. 194-VII), cryptocurrency miners are mandated to procure electricity solely through a designated state platform managed by the Ministry of Energy. Nevertheless, it appears that several energy companies had, over a two-year period, been providing electricity that was meant for public consumption and critical infrastructure to these mining entities.
To control electricity usage and prioritize public service necessities, crypto miners can only access power from the national grid if there is a documented excess supply. Authorities now assert that the quantity of electricity misallocated to these miners surpasses 50 megawatt-hours, sufficient to sustain a city with a population between 50,000 and 70,000 residents.
Consequences and Crackdown
Kazakh officials revealed that the orchestrator of this scheme had used the illicit profits to acquire two apartments and four vehicles in the capital, all of which have been frozen by court order pending potential forfeiture. This crackdown comes at a time when the landscape for cryptocurrency mining in Kazakhstan has changed drastically, resulting in a mass exodus of miners, including BTC miner Canaan, who have opted to leave the country amid the tightening regulations.
“The crackdown on illegal electricity supply highlights the government’s commitment to regulating the cryptocurrency mining sector and ensuring that public resources are protected.”
