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19-03-2022|Crypto

Kazakhstan has shut down over a hundred cryptocurrency mining farms.

As a result of continuous mining sector inspections, more than 100 crypto farms in Kazakhstan have shut down. Some of the facilities have been linked to notable businessmen and former government officials, according to authorities.    

Since last year's ban on the business in China, the rapid rise of crypto mining in Kazakhstan has been blamed for the country's ongoing electrical shortages and blackouts. The administration has even claimed that unlawful players in the industry are endangering the country's economic security.

Kazakhstan's Financial Monitoring Agency reported Tuesday that 55 mining farms have "voluntarily" closed down following inspections ordered by President Kassym-Jomart Tokayev. They've put a stop to their operations, dismantled and removed their equipment from a number of locations.

Tokayev charged the watchdog in February with identifying and validating all businesses minting digital currencies, as well as their tax, customs, and technical documents. The agency was supposed to perform the audits in collaboration with other government agencies and report back by the middle of March.

Some of the mining businesses that have shut down are linked to well-known entrepreneurs in Kazakhstan, such as Alexander Klebanov of the Pavlodar area and Bolat Nazarbayev, the brother of former President Nursultan Nazarbayev, who ruled the country for decades after the Soviet Union disintegrated.

Bolat Nazarbayev was reportedly involved in cryptocurrency mining in Northern Kazakhstan, according to media sources. After quelling political turmoil in January that impacted miners, President Tokayev's administration has been focusing on the Nazarbayev family's corporate interests.

Other public personalities with reported cryptocurrency mining investments include Kairat Sharipbaev, the former chairman of the Qazaqgaz energy company, and Erlan Nigmatulin, a prominent businessman from the Karaganda region.

More than 50 illegal mining farms have been shut down by inspectors.

Inspectors also decommissioned 51 unlawful crypto farms, whose owners had failed to notify authorities before beginning operations or had linked their technology to the electrical grid without permission. Some of these facilities were housed in special economic zones, allowing them to avoid paying taxes and customs fees.

Entities associated to Kairat Itemgenov, one of Kazakhstan's richest persons, are among the mining businesses involved in criminal operations. Tlegen Matkenov, a former head of department at the Ministry of Internal Affairs, has been linked to other companies that operate underground mining farms.

The Financial Monitoring Agency has filed 25 criminal complaints and seized 67,000 mining equipment pieces. According to the authority, the recent crackdown has resulted in a 600 MWh reduction in energy use in the country.

The lack of adequate regulation of mining and cryptocurrencies, according to the agency, poses a threat to the country's financial system and inhabitants. Its representatives are part of a working committee comprising specialists from the ministries of digital development, energy, and finance to establish new legislation for the crypto business.

Kazakhstan became a crypto mining hub in 2021, but energy supply issues have caused several mining companies to transfer to other nations, including the United States. According to Kazakhstan's National Association of Blockchain and Data Center Industry, authorized miners have already relocated a third of their equipment out of the country.

Do you think Kazakhstan will keep cracking down on cryptocurrency mining? In the comments area below, please share your thoughts on the topic.

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