According to industry experts, Kazakhstan, one of the top bitcoin (BTC) mining sites in the world, is likely to lose control of BTC hash rate share in the next hash rate update.

According to the Cambridge Bitcoin Electricity Consumption Index (CBECI), Kazakhstan will host over 18% of the global BTC hash rate in August 2021, second only to the United States.

The bitcoin mining boom in Kazakhstan was partly driven by the exodus of Chinese miners due to the collapse of the cryptocurrency in China. Before dropping to zero in August 2021, the Chinese BTC hash rate was over 75% in 2019.

But even though several Chinese mining giants such as Canaan and will move their operations to Kazakhstan in 2021, the country is likely to lose share in the hash rate for many reasons, according to several industry leaders. . This will likely see Kazakhstan withdraw from the three largest BTC mining countries in the upcoming CBECI update, which is expected to be released in March.

Bitcoin mining hash distribution in the world. Source: CBESI.
Philip Ng, vice president of enterprise development at data center company Soluna Computing, expects bitcoin mining to eventually decline in Kazakhstan, largely due to volatile electricity subsidies.

“We expect some mining operations to continue in Kazakhstan, but we do not expect it to exceed 10-15% of the global hash rate in the future. The reason is that electricity subsidies in Kazakhstan are not sustainable,” Ng told Cointelegraph. The Kazakh authorities are considering eliminating electricity subsidies to achieve financial stability in the country. country.

According to Origin Protocol co-founder Josh Frazier, another reason Kazakhstan is losing its leadership in BTC mining is its dependence on the oil and gas industry.

“Countries that rely heavily on these energy sources for crypto-mining may experience a decline in their hashrate due to higher prices or government intervention,” Fraser told Cointelegraph, noting the ongoing geopolitical tensions and their impact on oil and gas prices.

“I expect the US, Canada and Germany to slightly increase their share of the global retail rate due to [the] high availability of renewables and very high retail growth recently. I expect Russia, Kazakhstan and Iran to go down a bit,” Frazier. He said. .

As previously reported, Kazakhstan faced significant cannabis instability due to political unrest in early January, when the country’s president resigned and the government shut down the internet for several days. According to David Lesperance, managing partner and tax advisor at Lesperance & Associates, the political turmoil, along with potential energy price hikes and new taxes on cryptocurrency mining, will certainly make Kazakhstan a less attractive jurisdiction for miners.

“When Kazakhstan considers raising taxes on crypto miners, I think you will see that miners who are not yet afraid of the recent internet shutdown have another reason to look for a better long-term place to work,” Lisbrance told Cointelegraph.

He added that crypto miners must find a jurisdiction that meets many criteria for long-term success and provides a stable supply of green energy at long-term predictable prices, the rule of law to protect operations, and a politically stable jurisdiction, among others.

Related Topics: Mining Around the World: Where Should Crypto Miners Go in the Changing Landscape?

Some Chinese mining giants are already showing signs of a possible pull-out from expansion in Kazakhstan. According to a filing dated February 17 with the US Securities and Exchange Commission, BIT Mining, one of the largest BTC miners that moved its operations from China to Kazakhstan in 2021, is abandoning some of its crypto mining plans in Kazakhstan.

“The company has completed its plan to build a data center in Kazakhstan, which was announced in May 2021, due to the unstable domestic power supply,” says the BIT Mining archive. The company added that it is still operating BTC miners with a total hash power of 292.7 PH/s in the country.

Source: CoinTelegraph