Bitcoin Mining
Bitcoin mining becomes more sustainable after leaving Kazakhstan
The Bitcoin mining landscape keeps developing as more local governments define their stance on it.
Ever since China’s crackdown on mining — which led to one of, if not the greatest miner migration in Bitcoin history — we’ve seen more events that have led the industry to where it is now. Especially last year, in which the negative price action and the increase in electricity prices forced miners to look for alternatives to thicken their margins.
In that search for reducing costs, Kazakhstan — located in Central Asia — was one such country that had seen a growing trend of Bitcoin mining due to its abundant supply of cheap electricity.
Bitcoin mining in Kazakhstan: an overview
Kazakhstan has a vast power production infrastructure, which not only means abundant energy, but also more convenient prices. This abundant and cheap source of electricity had attracted many Bitcoin miners to the country, looking to take advantage of the low energy costs.
The advantages were so large that Kazakhstan managed to be the second-largest mining hub in the world, concentrating 18.1% of the total hashrate according to Cambridge University.
Most of these miners moved to the country after being pushed out of China, its next-door neighbor who banned Bitcoin mining and other energy-intensive activities in 2021.
As a result, Kazakhstan saw a significant increase in the number of data centers and mining farms dedicated to mining Bitcoin.
The growth of Bitcoin mining in Kazakhstan was so meteoric that it didn’t take long to put the electricity grid under stress. In fact, by the end of 2021, Bitcoin miners were using around 7% of Kazakhstan’s entire electricity production.
The situation worsened in 2022, where power shortages and localized blackouts became a regular occurrence. This led to popular protests from the country’s citizens and, soon after, to the government’s decision to take action against Bitcoin mining within its territory.
Kazakh authorities were much not as severe as China’s, though, as the actions were mainly chasing down illegal mining activities and curtailing Bitcoin mining so that it can only happen during the night.
Although at first this was another tough blow for miners, who were having trouble finding a home, time has proven it to have had a positive outcome in the end: miners have effectively relocated, Kazakhstan power grid has balanced. And, due to the abandonment of the country’s fossil fuel-generated electricity, Bitcoin mining has become more sustainable and clean.
A more sustainable Bitcoin mining
According to Our World in Data, 96.01% of the electricity consumption of Kazakhstan was covered by fossil fuel-generated power. Of course, this includes Bitcoin miners.
What does this mean for Bitcoin mining energy mix in general? According to Daniel Batten, “it makes a pretty significant difference. The exodus from Kazakhstan flipped the network to become a majority clean-energy user.”
In other words, abandoning Kazakhstan’s fossil fuel sources led to Bitcoin’s energy mix becoming over 50% zero-emission.
“Because Kazakhstan uses so much coal, the difference in emissions is even more significant. At 18.3% of total hash rate, Bitcoin emissions would’ve been 36 metric tons of carbon dioxide equivalent C(MTCO2e). But at current levels, emissions are only 32.4 MtCO2e. That’s a 10% reduction in emissions.”
— Daniel Batten, Bitcoin Magazine
More importantly, this change strengthens the trend that Bitcoin is switching to clean energy usage, which is projected to be 4% higher every year at least until 2027.
To sum up, Kazakhstan became an attractive destination for Bitcoin miners leaving China due to its abundant and cheap energy. However, the country didn’t have the infrastructure to support the overwhelming amount of hashrate inflow it was receiving.
As a consequence, the Bitcoin mining craze within its territory was short-lived, and although it was a tough blow for miners, it turned out well in the end: Bitcoin is now powered by over 50% of zero-emissions electricity, and data suggests this trend will only continue to improve for the years to come.
