The second instalment of HASHR8’s Bitcoin Mining Index explores the Bitcoin mining industry in Kazakhstan. Previous research from the Cambridge Center of Alternative Finance showed Kazakhstan's share of global hashrate growing from September 2019 to April 2020. Estimated hashrate grew from 1.42% to 6.17% over this timeframe.
The growth is unsurprising. Several factors are favourable to Bitcoin mining in Kazakhstan. Miners have the ability to secure some of the lowest CapEx and OpEx while also operating with legal clarity. Those that are willing to invest in the necessary infrastructure can secure electricity rates which will put them in the lowest 5% of miners. Rates as low as $0.02 per kWh can be secured if facilities own their energy infrastructure. Such investments will go up to several million USD. However, miners who are not willing to make such investments can still access extremely competitive rates with the prices ranging from $0.03 to $0.043. Such rates are estimated to be among the lowest third of all miners. Kazakhstan miners also have attractive conditions for CapEx costs. VAT exemptions can be secured on imported mining machines and low labour costs reduce the costs associated with data center buildout.
A federal law passed in June 2020 clearly defined the industry and allows miners to operate with legal clarity. Businesses bundle services like hardware maintenance, power costs, and internet connectivity and sell them as a packaged service to domestic and overseas entities. With clear regulation and competitive costs, it is natural that capital is flowing into Kazakhstan’s mining industry. A government minister has estimated that $190 million has already been invested in the country’s crypto mining sector with a further $715 million anticipated over the next three years.
Download here: The State of Bitcoin Mining in Kazakhstan