Due to ongoing mining sector inspections, over 100 Kazakhstan crypto farms closed their doors. The authorities have discovered that certain facilities may be linked to businessmen or former government officials.
Financial Watchdog pursues crypto miners across Kazakhstan
The rapid expansion of crypto mining in Kazakhstan, since last year’s crackdown on the industry in China, has been blamed for persisting problems with electricity shortages and blackouts. The government has gone so far as to claim that illegal players in the sector are threatening the country’s economic security.
Following inspections ordered by President Kassym-Jomart Tokayev, 55 mining farms have “voluntarily” closed down, Kazakhstan’s Financial Monitoring Agency announced Tuesday. They’ve suspended all activities and dismantled their equipment at a variety of places.
Tokayev gave the watchdog in February the task of identifying digital currency-minted enterprises and verifying tax, customs and technical documentation. It was to perform the checks with government agencies and return a report by mid-March.
Some mining companies which have shut down operations now are associated with prominent entrepreneurs from Kazakhstan, like Alexander Klebanov of Pavlodar and Bolat Nagabayev who was the brother of Nursultan, the ex-president of Kazakhstan. He ruled Kazakhstan for over a decade after the collapse of the Soviet Union.
According to media reports Bolat Nazarbayev is involved in crypto mining in Northern Kazakhstan. President Tokayev’s administration has been targeting business interests of the Nazarbayev family after quelling political unrest in January which affected miners as well.
Kairat Sharipbaev (ex-chairman of Qazaqgaz’s board) and Erlan Nigmatulin (a prominent Karaganda businessman), are two other public figures who have been accused of investing in cryptocurrency mining.
Over 50 illegal mining farms are closed by inspectors
Government inspectors have also shut down 51 illegal crypto farms, the owners of which hadn’t notified authorities of starting activities or had connected their hardware to the power grid without permission. This was because some of the facilities were in designated economic zones.
Among the mining companies engaged in illegal activities are entities linked to one of Kazakhstan’s richest people, Kairat Itemgenov. Tlegen Matkenov was once the head of the Ministry of Internal Affairs’ underground mining department.
Financial Monitoring Agency filed 25 criminal cases against the suspects and seize 67,000 mining equipment. According to the regulator, the new crackdown helped reduce the country’s energy use by 600MWh.
The lack of sufficient regulation of mining and cryptocurrencies, the agency warned, creates risks for the country’s financial system and its citizens. With experts from energy, finance and the ministry of digital development its representatives will be part of a group working to create new regulations for crypto.
Although Kazakhstan has been a major crypto-mining hotspot since 2021, problems with electricity supply forced some companies to relocate to countries like the U.S. Recently, the National Association of Blockchain and Data Center Industry of Kazakhstan revealed that authorities have moved about a third of its equipment outside of Kazakhstan.
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