Kazakhstan's new digital development minister Bagdat Mussin plans to reinforce the country's economy by expanding its crypto mining sector with a 300 billion tenges (approximately $715 million USD) investment.
Talks of expansion are already underway. On Wednesday, Mussin made the case that fueled by the country's access to cheap electricity, an extension to Kazakhstan's already successful mining operations could boost revenues higher.
"More than 80 billion tenge (approximately $190 million USD) has been invested in the sector," Mussin said on Wednesday in a quote cited by Reuters. "Today we have preliminary agreements on attracting investments worth 300 billion tenge."
The central Asian country already boasts 13 mining farms with Mussin noting that an additional four are currently under construction.
According to the University of Cambridge's Centre for Alternative Finance (CCAF), Kazakhstan accounts for over 6% of Bitcoin's global hash rate as of April 2020 - making the country the fourth-largest Bitcoin mining hub after China, the US, and Russia.
Kazakhstan's transformation into a crypto mining hub began soon after thinning post-halving margins left Bitcoin miners in search of discounted electricity.
Thanks to its oil-driven economy, Kazakhstan boasts some of the cheapest electricity in the world with prices as low as $0.04 per kilowatt-hour (kWh).
As a knock-on effect, the country has witnessed a 334% uptick in hash rate since Q3 2019, per data from the CCAF.
"Kazakhstan has definitely been one of the fastest-growing countries for Bitcoin mining over the past few years,” Thomas Heller, chief operating officer at Bitcoin mining and media company HASHR8, told the BTC Times.
“There is an abundance of cheap, coal power that is available for mining - hundreds of megawatts,” Heller added. “The conditions in Kazakhstan are very suitable for mining. It's close to China and the climate is cool. It's becoming a popular location for Chinese miners to move old-gen machines from China to Kazakhstan to take advantage of cheaper electricity prices outside of the Sichuan Hydro Season.”
According to Heller, however, it is Kazakhstan’s favorable stance on mining regulation that truly cemented its position as a formidable mining contender. In June, Kazakhstan passed legal revisions effectively legitimizing Bitcoin mining, in hopes of attracting further business.
This is a far cry from the country's previously harsher stance on cryptocurrencies. In 2018, the National Bank of Kazakhstan moved to outlaw cryptocurrencies altogether. A u-turn from the Kazakh Government several months later instead pushed for the regulation of the industry.
Still, even with $700 million in backing, Heller remains skeptical of whether Kazakhstan’s budding mining hub will overtake the frontrunners.
“It's unlikely it would become bigger than the big 3 player [sic] of mining in the near future: China, USA and Russia, due to the established nature of Bitcoin mining, as well as the continued expansion of new mining farms in those countries,” he explained.