Unlicensed mining operations continue to cause economic losses in Kazakhstan despite efforts to separate the industry from the shadows.
The latest estimates show that the damages the state has suffered over the past few years will be well over billions of Kazakhstanitenge, but the government has been able to recover some of the money in the form of seized digital assets.
Underground mining farms stole electricity from big cities
The illegal crypto mining facility has been responsible for approximately tenge (over $2.3 million) losses in state revenue since the beginning of 2024. The financial authorities in Kazakhstan are calculating.
Investigators opened 17 criminal cases in the same period, the country’s financial watchdog (AFM) announced Thursday.
Most of the illegal Bitcoin farms have been found in the capital Astana (5), Sinkent city in southern Kazakhstan, and Kostanay (3 each) in the north.
“As part of these cases, $642,000 in digital assets have been seized and confiscated,” AFM noted in a press release.
“It should be noted that some illegal mining farms operated by stealing electricity in amounts comparable to the consumption of large cities can be breaching the rights of residents living near noisy farms.”
Watchdog highlighted that Coin Minting’s illegal electricity usage is depriving other business and industrial projects, development initiatives and social infrastructure for necessary energy resources.
Kazakhstan’s cryptomining boom, following China’s decision to ban activities several years ago, initially caused major power disruptions across Central Asian countries.
The government addressed the issue through regulation and pricing, primarily solving the issue, at least as far as licensed cryptocurrency miners are concerned.
However, unregistered mining operations, which often run with illegally procured electrical energy, continue to be a major challenge for authorities.
Kazakhstan collects more than $30 million in taxes from the mining sector
Separately, Kazakhstan has benefited greatly from the influx of miners after adopting growth industry rules, such as mint sales on domestic licensed exchanges and taxation of profits by the state.
In a post on its telegram channel, AFM acknowledged that Crypto Mining has cited data from the state’s revenue and merchant committee, exceeding the state’s budget receipts of 17 billion (over $31 million).
The agency also reminded us that mining companies are only allowed to operate in Kazakhstan after they have obtained their respective licenses. I emphasized further:
“Legal mining activities require equipment verification, energy supply contracts and tax compliance.”
The AFM also emphasized that it “involves criminal liability, harms the economic security of the country and leads to power outages.”
The regulatory body has urged entrepreneurs and Kazakhstani citizens to refrain from participating in illegal mining and support the development of the country’s transparent digital asset market.
Kazakhstan aims to become a regional cryptocurrency hub. The country was recently visited by Changpeng Zhao (CZ), founder of Crypto Exchange Binance and owners of Pavel Durov, a popular telegram messenger. Both met with President Kasim Jomart Tokayev and participated in major technical forums.
Financial watchdogs are also active in other areas. Earlier this week, they announced the dismantling of perhaps the largest crypto laundry service in the post-Soviet space, a platform known as the Raks Exchange.
Last month, Kazakhstan broke a massive crypto-ponzi scheme, seizing $10 million on digital assets collected from fraudulent investors in Central Asia and Eastern Europe, as reported by Cryptopolitan.
