The government of Kyrgyzstan, a central Asian state bordering China, has shown its support for the growth of cryptocurrency mining within its borders. According to the national news agency Kabar and other sources, President Sadyr Japarov has reportedly approved the construction of a cryptocurrency mining farm at a hydroelectric power plant.
The Kyrgyz government plans to invest up to $20 million in the creation of this cryptocurrency mining facility at the Kambar-Ata-2 Hydro Power Plant. The initiative is seen as a way to mitigate energy losses associated with unused power from the power plant. Since the launch of Kambar-Ata-2 in 2010, Kyrgyzstan has reportedly lost 6.8 billion kilowatt-hours (kWh) of energy due to this issue.
President Japarov believes that establishing a mining farm will allow the government to utilize the remaining energy efficiently and benefit the country’s budget. He stated, “As soon as the mining farm starts working, the earned money will go to the power engineers or, to be more precise, to the ordinary people. Each tyiyn, every kWh will be under the control of power engineers. Everything will be automated and under our control.”
This move comes despite recent energy-related challenges in Kyrgyzstan. On July 24, the Kyrgyz president announced a state of emergency in the energy sector of Kyrgyzstan, which is scheduled to start on Aug. 1, 2023, and is expected to end on Dec. 31, 2026. The emergency situation is reportedly caused by climate challenges, a low inflow of water into the Naryn River basin, and the lack of generating capacity due to excessive growth of energy consumption.
However, the president emphasized that crypto mining will be tariffed at the highest rate available in Kyrgyzstan, or around 5 Kyrgyzstani soms ($0.057) per kW. This move is seen as a way to generate additional revenue for the country while also regulating the energy consumption of the crypto-mining industry.
The Kyrgyz government’s move towards embracing cryptocurrency mining reflects a growing trend among governments worldwide. As the crypto industry continues to grow, more countries are recognizing the potential economic benefits of supporting and regulating this industry. However, the environmental impact of crypto mining, particularly in terms of energy consumption, remains a contentious issue.
In Kyrgyzstan, the use of a hydroelectric power plant for crypto mining represents an attempt to address these environmental concerns. By using renewable energy sources for mining operations, the Kyrgyz government is hoping to create a more sustainable model for cryptocurrency mining.