According to the official position of the Ministry of Energy of the Republic of Kazakhstan, the shortage of electricity in the National Grid in the autumn-winter period of 2021- 2022 was formed due to the rapid growth of consumption by digital mining. In particular, the System Operator reported that the main factors of the deficit were high accident rate at power plants and significant increase in electricity consumption, which over the past year exceeded 6%, i.e., 3 times more than in recent years. For reference, in 2020, the increase in electricity consumption was 20/G, in 2019 - 19%.

In conditions of electricity shortage, in order to ensure uninterrupted power supply to the population and the economy of the country, KEGOC JSC, together with power plants and energy supply organizations, in accordance with the requirements of the current regulatory Legal acts of the Republic of Kazakhstan, took measures to reduce planned electricity supplies to mining data centers.

In particular, for example, KEGOC JSC reported complete cancellation of planned electricity supplies to persons engaged in digital mining (full restriction from 00:00 to 24:00 Nur-Sultan time) in the period from January 24 to 31, 2022. Earlier it was reported that half of all mining farms, which account for about 1,000 -1,200 MW of electricity consumption, are "gray" miners.

In November 2021, it was reported that only 50 mining farms were officially legalized in Kazakhstan.

Kazakhstan has become a haven for numerous miners, forced to look for new places for their farms after the Chinese authorities banned any use of cryptocurrencies in the country, and then investments in cryptocurrency. Many Chinese mining companies sold equipment very cheaply because they were completely out of the game. As a result, most of the machines settled in the gray mining zone of Kazakhstan.

In order to remedy the situation, the President of the Republic of Kazakhstan K.-J. Tokayev instructed the Financial Monitoring Agency to identify all mining farms in Kazakhstan by March 15, increase the tax on cryptocurrency mining tenfold, and the Government of the Republic of Kazakhstan to provide a package of solutions for further regulation of the sphere by April 1 this year.

In order to fulfil this instruction, the Government of the Republic of Kazakhstan initiated amendments to the Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" (Tax Code), according to the draft of which, the fee rate is determined:

• in the amount of 10 KZT per 1 kilowatt-hour of electric energy when using the electric power resources of the Republic of Kazakhstan;
  
  
• in the amount of 3 KZT per 1 kilowatt-hour of electric energy when using renewable energy sources of the Republic of Kazakhstan (with the exception of hydroelectric power plants);
  
  
• in the amount of 5 KZT per 1 kilowatt-hour of electric energy when using electric energy from the power systems of neigh boring states.

According to the developers, this measure will increase budget revenues from mining, as well as reduce uncontrolled electricity consumption by mining farms.

Measures to search for "gray" miners were not long in coming. For example, in five days in mid-February, thirteen mining farms with a total capacity of 202 megawatts were identified in eight regions of Kazakhstan. In the Karaganda region, the fact of digital mining activities with a total capacity of 31.3 megawatts was revealed, in the Pavlodar region - 22 megawatts, in the Turkestan region - 128 megawatts, in the Akmola region -1.03 megawatts, in the Kostanay region - 0.82 megawatts, in the capital -1.8 megawatts, in Almaty - 3.5 megawatts, Shymkent - 4 megawatt.

However, at the beginning of this March the Ministry of Energy of the Republic of Kazakhstan initiated a draft order “On amendments to some orders of the Minister of Energy of the Republic of Kazakhstan”. The draft of this Order includes important amendments regarding the development of legal digital mining in Kazakhstan. As is commonly known, the President of the Republic of Kazakhstan K.-J. Tokayev, speaking at an expanded meeting of the Government of the Republic of Kazakhstan on February 8, 2022, noted that the state is not against "white" mining. At the same time, those who want to work in this field must have an appropriate license, receive electricity at adequate tariffs, declare income and pay taxes, and launch green energy projects.

The draft Order under consideration assumes measures aimed at reducing restrictions on the planned supply of electric energy for companies engaged in legal digital mining of cryptocurrencies, putting forward a number of criteria, such as ownership of equipment, registration with tax authorities, connection to grid through an energy transmission organization, informing the authorized body in the field of information security, availability of technical connections to the networks agreed with the System Operator, the availability of documents for the customs declaration of imported equipment.

It is necessary to understand that companies engaged in Legal digital mining are participants in the energy system, which consume electricity constantly, as well as many other business entities. Taking into account the instructions of the President to increase the mining tax, these companies, in addition to creating highly qualified jobs in the regions, will also contribute to the budget in the form of tax deductions, which are likely to grow in the near future.

However, taking into account the current situation with the shortage of electricity, the restriction of electricity supplies to mining data centers, investors are ma king active efforts to find accommodation in countries with different tariffs, but lower investment risks, such as the USA, Canada, South American countries.

The issue regarding the construction of renewable energy capacities for mining farms also remained debatable, since such facilities need uninterrupted generation of electricity 24/7, which RES cannot provide for now. At the same time, miners are asking a question that they cannot yet get an answer from official sources: "Are miners the cause of the electricity shortage in Kazakhstan?" and they complain that in order to reduce the deficit and reset consumption in the system, they decided to sacrifice digital mining.

The issue regarding the construction of renewable energy capacities for mining farms also remained debatable, since such facilities need uninterrupted generation of electricity 24/7, which RES cannot provide for now. At the same time, miners are asking a question that they cannot yet get an answer from official sources: Are miners the cause of the electricity shortage in Kazakhstan?" and they complain that in order to reduce the deficit and reset consumption in the system, they decided to sacrifice digital mining.