The Kyrgyz Republic, a central Asian state bordering China, is set to increase its cryptocurrency mining capabilities with the support of the local government. Kyrgyz President Sadyr Japarov has given approval for the construction of a crypto mining facility at a hydroelectric power plant, as reported by Kyrgyzstan’s national news agency, Kabar, on July 27. The government plans to allocate up to $20 million for the establishment of the mining farm at the Kambar-Ata-2 Hydro Power Plant.
According to President Japarov, the mining farm will enable the government to utilize the unused power from the plant and avoid energy losses. Since its launch in 2010, the Kambar-Ata-2 plant has experienced losses of 6.8 billion kilowatt-hours (kWh) of energy. By deploying the remaining energy for cryptocurrency mining, the government aims to generate revenue for the country’s budget. President Japarov emphasized that the earnings from the mining farm will be directed towards the power engineers and the ordinary people, ensuring accountability and automation.
Interestingly, this announcement appears to contrast recent developments in the energy sector of Kyrgyzstan. On July 24, President Japarov declared a state of emergency scheduled to begin on August 1, 2023, and end on December 31, 2026. The emergency situation is attributed to climate challenges, low water inflow into the Naryn River basin, and insufficient generating capacity due to the excessive growth of energy consumption.
In the latest report by Kabar, President Japarov acknowledged that cryptocurrency mining in Kyrgyzstan will be subject to the highest tariff rate, approximately 5 Kyrgyzstani soms ($0.057) per kilowatt (kW). However, the Kyrgyz government’s press office did not respond immediately to requests for additional information.
The government of Kyrgyzstan has increasingly recognized cryptocurrency as an opportunity to stimulate the local economy. In March 2022, Kyrgyz lawmaker Karim Khanjeza urged authorities to legalize the cryptocurrency industry and establish a regulatory framework. He emphasized the rapid growth of cryptocurrency and its potential benefits for the country.
While Kyrgyzstan introduced some regulations for crypto exchanges in 2021, there have been no comprehensive crypto-related laws passed thus far. Several years ago, a former government official attributed the energy crisis in Kyrgyzstan to the significant energy consumption associated with cryptocurrency mining.
This move by the Kyrgyz government aligns with the global trend of countries seeking to leverage cryptocurrency mining as a means to boost economic development. By utilizing its hydroelectric power plant for mining activities, Kyrgyzstan aims to turn energy losses into a profitable venture. As the project unfolds, it will be interesting to witness the impact of this decision on the country’s energy sector, economy, and the broader cryptocurrency industry.
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