Many Chinese crypto mining giants, such as BIT Mining, have already abandoned their expansion plans in Kazakhstan.
According to industry experts, Kazakhstan, one of the best Bitcoin (BTC) mining destinations in the world, is likely to lose its BTC hashtag share leadership in the next hashtag distribution update.
As per the Cambridge Bitcoin Electricity Consumption Index (CBECI), Kazakhstan has a BTC hash rate of more than 18% in the world as of August 2021, followed only by the United States.
While the increase in BTC mining power in Kazakhstan was driven somewhat by the emigration of huge Chinese miners inspired by China’s cryptocurrency crackdown. Before falling to zero by August 2021, China’s BTC hashtag power is back to more than 75% in 2019.
Although many Chinese BTC mining giants such as Canaan and BTC.com have relocated their operations to Kazakhstan in 2021, according to industry executives, the country is likely to eventually lose its hashtag share for several reasons. Kazakhstan will likely withdraw from the top three BTC mining countries in the next CBECI update to be released in March.
As Philip NG, vice president of corporate development at data centre company Soluna Computing, predicts, bitcoin mining will eventually end up in Kazakhstan, mainly due to unsustainable electricity subsidies.
Phillip Ng said that “We expect that some mining will persist in Kazakhstan but do not anticipate that it will be more than 10% to 15% of global hash rate in the future. The reason is that the power subsidies in Kazakhstan are unsustainable,”
Another reason for Kazakhstan to potentially lose its BTC mining leadership is the country’s reliance on the oil and gas industry, according to Origin Protocol co-founder Josh Fraser.
He added that crypto miners need to find a jurisdiction that meets several criteria for long-term success, inducing stable green energy supplies with predictable long-term pricing, the rule of law to protect operations, politically stable jurisdiction and others.
Some Chinese crypto mining giants are already showing signs of a potential U-turn of expansion in Kazakhstan. BIT Mining, one of the largest BTC mining companies that relocated operations from China to Kazakhstan in 2021, is scrapping some of its crypto mining plans in Kazakhstan, according to a Feb. 17 filing with the U.S. Securities and Exchange Commission.
“The Company has terminated its data center construction plan in Kazakhstan, which was announced in May 2021, due to the unstable local power supply,” BIT Mining said in the filing. The company added that it still runs BTC mining machines with a total hash rate capacity of 292.7 PH/s in the country.