Financial and law enforcement authorities in Kazakhstan have unraveled a scheme to mine cryptocurrencies using illegally sourced electrical power.
Losses caused by the perpetrators amount to more than $16 million, officials said, noting the energy sold to mining farms in the eastern part of the country could have satisfied the needs of a small city.
Crypto miners in Kazakhstan burn 50 MWh of household electricity
The regional departments of Kazakhstan’s Financial Monitoring Agency (AFM) and National Security Committee (KNB) in the East Kazakhstan Oblast have put an end to a large-scale sale of electricity to mining firms in the area, local media reported.
The two government agencies established that, over the past two years, employees of local utilities illegally sold mining companies’ electrical energy originally intended for the population, social facilities, and enterprises of strategic importance.
The miners used more than 50 megawatt-hours (MWh) to mint digital coins during the period, comparable to the energy consumption of a city with around 50 – 70,000 residents, the financial watchdog noted in a press release and a Telegram post on Monday.
In accordance with Kazakhstan’s current law, mining farms are only allowed to buy electricity directly from a state-run platform operated by the Ministry of Energy, and in amounts of 1 MWh or less, the AFM highlighted.
Within the ongoing investigation, the regulatory body estimated that the power illegally supplied to the crypto mining farms costs over 9 billion Kazakhstani tenge (approx. $16.5 million). It also revealed:
“The organizers used the criminal proceeds to purchase two apartments in the capital and four vehicles, which were seized with a court order for potential confiscation.”
Kazakhstan is yet to solve its crypto mining problems
Kazakhstan became a magnet for cryptocurrency miners following China’s decision to enforce a ban on Bitcoin mining a few years ago. Initially welcomed by the Central Asian nation, mining companies were eventually blamed for the country’s growing power deficits and grid breakdowns.
The government has since taken steps to regulate the sector, including its power consumption and taxation. In May, Deputy Minister for Digital Development Kanysh Tuleushin announced the state had collected nearly $35 million in mining tax in just three years.
Authorities in Astana have also tried to make sure miners sell their minted crypto on domestic platforms. Earlier this year, financial regulators proposed legislative amendments to legalize cryptocurrency trading by adopting a licensing regime for local exchanges.
In June, the National Bank of Kazakhstan supported the initiative of a group of lawmakers to create a state-controlled reserve for digital assets. The monetary authority also greenlighted a project to issue payment cards linked to crypto wallets.
Officials in Astana also said they want to test payments with digital currencies in a special “pilot zone” called “CryptoCity.” The plan was unveiled by Kazakhstan’s President Kassym-Jomart Tokayev during an international forum in the capital city this past spring.
Kazakhstan is not the only country in the post-Soviet space facing challenges when it comes to dealing with the energy needs of crypto mining.
Russia, which legalized the industry in 2024, has been forced to temporarily restrict or permanently ban the activity in over a dozen regions, citing increasing energy shortages as the main reason.
In July, the Ministry of Energy in Moscow was tasked to finalize regulations for entities engaged with mining. The draft rules include harsher punishments for illegal connection to power distribution networks and electricity theft, as well as for violations of mining restrictions.
Under the updated regulatory framework, crypto mining facilities will be added to a new category of electricity consumers of lesser importance, which will allow Russian authorities to remotely disconnect Bitcoin farms from the grid during peak hours.
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