The Financial Monitoring Agency, Kazakhstan’s financial regulator, insists on the need to regulate the nascent industry. In that context, the watchdog reported earlier on March 15 that up to 55 illegal mining farms “voluntarily stopped their operation” following an enforcement campaign by the authorities and an additional 51 entities had their operations terminated.
This enforcement operation targeted the illegal mining operations that are believed to have compromised the country’s energy network. The agency insisted on the development of a clear regulatory approach to crypto mining in its release.
Based on the official release, all the targeted operators froze their mining activities and dismantled the rigs while simultaneously eliminating them from the places of deployment. Also in the same release, several high-profile business figures allegedly linked with the illicit activities were mentioned.
Some of those who were mentioned include a former head of the drug crime department of the national police, an ex-chairman of the state-owned Qazaqgaz gas company, and the 17th richest individual in the nation.
All these operations were believed to be illegal since they had not taken the initiative to inform the regulators about their activity. Moreover, they had managed to illegally attach themselves to the grid or had evaded tax and custom payments. A portion of the energy that the illegal operators consumed should have been allocated to the industrial production processes of the country.
The agency also seized over 67,000 pieces of equipment worth around $190 million and went on to open 25 criminal cases. Following the enforcement raid, the daily energy consumption in the nation allegedly dropped by 600 MWh.
This enforcement action was expected since Kazakhstan has been boosting its efforts to lower the stress load that the illegal cryptocurrency mining activities have been putting on its grid. In August last year, the nation hosted over 18% of the global BTC hash rate. However, in February 2022, the national Ministry of Energy confirmed its strategy to identify and disconnect the non-compliant mining farms from its grid.
That is not to say that the nation wants to implement a comprehensive crackdown on crypto mining activities. Signs seem clear that the government is striving to come up with a reasonable regulatory strategy that would enable it to benefit from the new opportunities that crypto presents.
Based on the press release by the Financial Monitoring Agency:
“Considering these developments, the interdepartmental task force is working on the systematic decisions to regulate the problematic issues.”