Kyrgyzstan, a landlocked nation nestled in the heart of Central Asia, is now purportedly expanding its foothold in the rapidly evolving realm of cryptocurrency mining, championed by the government’s active involvement.
A Green Light for Cryptocurrency Mining in Kyrgyzstan
Kyrgyzstan’s President Sadyr Japarov has given his express consent to developing a cryptocurrency mining farm within a hydroelectric power plant. This move was publicly announced by Kyrgyzstan’s state-run news agency, Kabar, on July 27. This high-profile initiative positions the country as a burgeoning player in the crypto mining landscape, fully endorsed by the Kyrgyz government.
In a daring leap toward the frontier of digital finance, the Kyrgyz government is earmarking a substantial sum of up to $20 million. The funds will help establish a cryptocurrency mining center at the Kambar-Ata-2 Hydro Power Plant.
Capitalizing on Unused Energy Resources in Kyrgyzstan
President Japarov elaborates that the novel venture of running a crypto mining farm would present a viable solution to mitigate energy losses linked to unutilized power generated by the plant. This strategic alignment of crypto mining with the nation’s energy policy would contribute significantly to preserving its valuable resources.
Since its inception in 2010, the Kambar-Ata-2 plant has reportedly lost 6.8 billion kilowatt-hours (kWh) of energy due to this very predicament. By hosting the mining farm, Kyrgyzstan aims to divert the surplus energy towards a lucrative purpose. Doing so adds value to the national exchequer. President Japarov asserts:
“With the commencement of the mining farm operations, the revenue generated will be channeled to the power engineers – or, more specifically, the citizens. Every single tyiyn, every kWh will be under the purview of power engineers. The entire process will be automated and thoroughly supervised.”
Addressing the Energy Crisis Amid Mining Endeavors
However, this development presents an apparent paradox with the recent energy-centric news from Kyrgyzstan. On July 24, the Kyrgyz president declared an impending emergency within the nation’s energy sector. This emergency status, slated to commence on August 1, 2023, and anticipated to conclude on December 31, 2026, is reportedly brought on by climatic tribulations. Additionally, there is a diminished inflow into the Naryn River basin, and a surge in energy consumption that outstrips the country’s generating capacity.
Despite the looming energy crisis, Japarov asserts that the crypto mining venture will be subject to the steepest tariff applicable in Kyrgyzstan, approximately 5 Kyrgyzstani soms ($0.057) per kW.
A Rallying Cry for Legalizing Cryptocurrency
In March 2022, Kyrgyz lawmaker Karim Khanjeza issued a plea to the Kyrgyz authorities during a parliamentary committee meeting. They advocated for the legalization of the cryptocurrency industry. The official argued that “nothing is growing as rapidly as cryptocurrency”. Moreover, they urged the government to establish a legal framework for this emerging industry.
Even though the Kyrgyzstan government introduced some regulations for cryptocurrency exchanges in 2021, it has yet to enact any laws pertaining directly to cryptocurrency. This lack of legal structure harks back to a former government official’s claim a few years prior that cryptocurrency mining was a significant contributor to the energy crisis in Kyrgyzstan.
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