Kazakhstan is home to one of the world's largest hubs for cryptocurrency mining. But the Kazakh mining scene could quickly change thanks to some proposed electricity regulations. Two founders of a leading Kazakhstan-based mining company are guests on this livestream to discuss their country's mining industry.

This livestream is essential educational information for anyone who wants a broader perspective on the global mining scene and any miners that are exploring new mining ventures or operations inside Kazakhstan.

Video Recording

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Audio Version

Show Notes

Introduction (timestamp)

  • David Bekbau, Co-founder of Xive Mining
  • Olzhas Kemal, Co-founder of Xive Mining

The state of mining in Kazakhstan right now? (timestamp)

  • A lot of Chinese miners moved to Kazakhstan.
  • Other foreign large mining facilities moved there, for example Genesis Mining.
  • Kazakhstan has the largest share of the network hash rate (18%) after the U.S.
  • Infrastructure left over from the soviet union is used for mining.
  • Electricity voltage from this infrastructure was downgraded and repurposed for bitcoin mining.
  • The Kazak government limits upside on power sales, miners buy from Russia and sell in Kazakhstan.
  • Due to electricity shortages, some mining farms are disconnecting from the grid.
  • Some gov. officials have proposed more expensive rates for mining electricity.

Kazakh vs. Russia, power market overview (timestamp)

  • Both countries limit usage with different regulations.
  • $0.05/kWh in Russia vs $0.035/kWh in Kazakhstan, during times of crisis miners of each country buy power from each other. In these arrangements they may be subject to additional fees and penalties
  • Higher electricity prices can discourage providers to maintain and update facilities in both countries.

Update on Xive's bitcoin mining farms (timestamp)

  • Xive is expanding into more farms to support Antminer and Whatsminer machines.
  • Xive built more containers for ASICs.
  • Construction has temporarily halted due to government electricity regulations for miners.

What are supply chains like for building farms in Kazakhstan? (timestamp)

  • Containers are hard to find due to shortages.
  • Water panels and ventilators are purchased from China.
  • Cabling for miners is purchased from Russia.

Chinese miners relocation process and challenges (timestamp)

  • It’s easier to do business in Kazakhstan because the documentation is clear.
  • Kazak consulting companies can help foreign miners draft and enter into power arrangements.

When did the electricity regulation conversations start? (timestamp)

  • The first electricity management proposal was to restrict bitcoin mining.
  • Every 2-3 days new proposals are being made in government regarding mining.
  • Suggestions include: limiting capacity per miner (1 megawatt per miner) and increasing electricity rates for miners.
  • Lawyers sometimes get involved in these conversations on behalf of bitcoin miners.
  • There is an electricity deficit in the country, but it can be solved collectively without targeting miners.
  • Recent law signed: Miners liable for taxes from January 2022.

What's the worst case scenario vs. most likely outcome for Kazakhstan power regulations for miners? (timestamp)

  • Limiting all Kazakhstan mining to 100 MW is crazy and probably will be rejected.
  • Most likely: the government disallows new farms but lets large existing farms continue operations, and taxes smaller and mid-sized farms

What percentage of hash rate do you expect Kazakhstan to hold? (timestamp)

  • It will likely drop due to looming Kazak regulations, meanwhile foreign miners, including the United States miners, are building out mining farms.
  • Kazakhstan has currently hit electrical capacity with a hash rate of 18%.
  • We expect the hash rate to sit between 5-10% within the next 5 years.

What does the next 6-12 months look like for Xive? (timestamp)

  • Xive is building off-grid facilities powered by natural gas.
  • Xive plans to visit the United States and look for areas to deploy farms and projects.
  • Xive recently launched "mini farms". They have 100 machine farms each and allow clients to buy part of the farm and its machines.

Hosted by Zack Voell and Will Foxley