Behind the protests in Kazakhstan in there are also bitcoins

Bitcoin is also behind the protests in Kazakhstan The price of energy has also risen because the country has become the eldorado of cryptocurrency miners

By Livia Paccarié

AP / Vladimir TretyakovAP / Vladimir Tretyakov

The protests that have flared up in Kazakhstan, triggered by the electricity and gas crisis, also seem to have to do with a financial activity in which the country is a champion: the mining of cryptocurrencies, such as Bitcoin and Ethereum. These activities, the set of complex technological procedures to create digital currencies, require a massive expenditure of energy, and the country, rich in hydrocarbons, has been, especially in the last year, the favorite destination of many crypto mining companies, legal and not - the latter operating without authorization, according to some national estimates, would amount to up to 50% of the total - attracted by the low price of energy. According to an estimate by the Financial Times, in the last 12 months, about 88,000 companies of this type have moved from the Chinese provinces to Kazakhstan, seeking independence from Beijing and exploiting the advantages of the former Soviet republic, given that among the main factors that allow for the profitability of cryptocurrency mining activities there is precisely the price of energy. But the figure, due to illegal operations, could be underestimated. The country thus quickly became the second in the world for Bitcoin mining.

According to data from the University of Cambridge, Kazakhstan's share in the hash rate of the Bitcoin network (i.e. how many times per second this network attempts to complete those complex calculations) amounts to 18.10%, ranking only behind the United States (35 , 40%) and ahead of Russia (11.23%). These activities contributed to the rise in internal energy consumption, which has grown by 8% since the beginning of 2021, against average annual increases that usually hovered around 2%. The Kazakh Ministry of Energy, accompanied by environmental activists, had already sounded the alarm last November, when it noticed this unprecedented increase in the demand for electricity. The government itself did not have too many doubts about the root cause to be identified in cryptomining. And Kassym-Jomart Tokayev, president of Kazakhstan, in the meantime commented on the state of the cryptocurrency industry in the country, saying that it was "necessary to clearly evaluate its potential" and that the state would do its utmost to promote the development of fintech. The government has therefore already declared that it will tighten measures against crypto mining activities that will be unauthorized and that it will impose a tax on all those having their registered office in Kazakhstan. The Deputy Minister of Energy has promised to "stop as soon as possible" these illegal activities, considered the only culprits of the ongoing energy crisis. The deputy minister called them "operations of small groups that mine Bitcoins without paying taxes''. Since January, the Kazakh government has decided to raise the price of energy to companies registered on a regular basis: they will pay an additional tenge (the Kazakh currency, equal to 0.00200 euros) for every kilowatt hour consumed. And another measure would include the rationing of energy for these companies to reduce the pressure on the electricity grid of the capital Nur-Sultan. Only yesterday, when the popular uprising had just begun, Canaan, the fifth largest crypto mining company in the world, announced the expansion of activities in the city of Taraz, 400 kilometers from the center of the Almaty uprising, reaching 10,300 Avalon Miner (the machines mining cryptocurrencies). In the meantime, in the country the state of emergency has been extended to the whole territory and the government has resigned.