BIT Mining, a Chinese crypto mining behemoth, has already shelved some of its expanding ambitions in the second biggest Bitcoin (BTC) mining country in the world.
According to experts in the field, Kazakhstan, one of the world’s leading Bitcoin (BTC) mining regions, is expected to take a hit on its Bitcoin (BTC) hash rate share dominance in the upcoming hash rate index update.
Kazakhstan had almost 18 % of the global hash rate of Bitcoin (BTC) in August of last year, right after the United States, per the Cambridge Bitcoin Electricity Consumption Index (CBECI).
The enormous Chinese miners’ flight sparked by China’s cryptocurrency crackdown contributed to Kazakhstan’s Bitcoin (BTC) mining power growth. China’s Bitcoin (BTC) hash rate capacity contributed to over 75% in 2019 before completely stopping in August 2021.
However, even though major Chinese Bitcoin (BTC) mining companies such as Canaan and BTC.com moved their facilities to Kazakhstan last year, numerous industry executives believe Kazakhstan will end up losing its hash rate share owing to a variety of factors. As a result, Kazakhstan is expected to slide out of the three leading Bitcoin (BTC) mining states in the upcoming report of the CBECI, which will be released in the coming month.
According to Phillip Ng, Vice President of Corporate Development at Soluna Computing, Bitcoin (BTC) mining in Kazakhstan will ultimately decline due to power subsidies lacking sustainability. Ng confirmed the following: “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.” Moreover, he highlighted allegations from January that Kazakhstani officials were considering reducing power subsidies in order to balance the country’s economy.
Kazakhstan’s dependency on the petroleum industry, as per Josh Fraser, the co-founder, is an additional cause for the country’s difficulty to maintain its Bitcoin (BTC) mining dominance. Fraser said that it is this dependency that could jeopardize the leading position since increases in prices are likely to ensue or they may be governmental action that would cause problems for the country to retain its position as a participant in the Bitcoin (BTC) global mining percentage. Fraser additionally argued that “I would expect the United States, Canada, and Germany to somewhat increase its share of global hash rates due to high availability of renewable energy and very high recent growth in hash rates. I would expect Russia, Kazakhstan, and Iran to drop a bit.”
During January 2022, political turbulence in Kazakhstan caused substantial hash rate disruption, with the country’s ruling cabinet leaving the internet being shut down by the government. According to David Lesperance, managing partner and tax advisor at Lesperance & Associates, political turmoil, probable energy price hikes, and increased crypto mining levies would all make Kazakhstan a less appealing environment for miners.
Speaking for Cointelegraph, Lesperance stated that “with Kazakhstan contemplating raising taxes on crypto-miners, I think that you will see the miners who were not already spooked by the recent internet shutdown having yet another reason to look for a better long-term location for their operations.”
Crypto miners, he continued, must select a country that fits a number of requirements for a steady performance in the long run, including dependable green energy production with consistent long cost, a properly crafted legislation that would support said activities, political instability, and so on.
Per a February 17 filing with the US Securities and Exchange Commission (SEC), BIT Mining, among the top Bitcoin (BTC) mining businesses that shifted its mining facilities from China to Kazakhstan over the past year, is abandoning some of its crypto mining expansion goals in the country. BIT Mining emphasized in the filing that “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 also disclosed that it continues to operate Bitcoin (BTC) mining rigs in Kazakhstan with an overall hash rate power of 292.7 PH/s.