Financial Watchdog Goes After Crypto Miners Across Kazakhstan
More than hundred crypto farms in Kazakhstan have terminated
operations as a result of ongoing inspections of the mining sector. Authorities have revealed that
some of the facilities are linked to prominent businessmen and former
government officials.
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 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 tasked 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 enterprises that have shut down are linked to
well-known Kazakh businessmen, such as Alexander Klebanov of the Pavlodar
region and Bolat Nazarbayev, the brother of former President Nursultan
Nazarbayev, who ruled the country for decades after the dissolution of Soviet
Union.
Bolat Nazarbayev was reportedly involved in bitcoin mining in
northern Kazakhstan, according to media sources. After quelling political
turmoil in January that also affected 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.
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 established in the special economic zones, allowing them
to avoid paying taxes and customs fees.
Among the mining companies engaged in illegal activities are
entities linked to one of Kazakhstan’s richest people, Kairat Itemgenov. Other firms running underground
mining farms have been associated with Tlegen Matkenov, former head of
department at the Ministry of Internal Affairs.
The Financial
Monitoring Agency has filed 25 criminal complaints and seized 67,000 mining
equipment pieces. Official sources have revealed that the recent crackdown has resulted
in a 600 MWH reduction in energy consumption across the country.
The lack of adequate regulation of mining and cryptocurrencies poses
a threat to the country's financial system and its citizens, the agency has warned.
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
shortages drove several mining companies to transfer to other nations, like the
United States. According to Kazakhstan's National Association of Blockchain and
Data Center Industry, authorised miners have already relocated a third of their
equipment to another country.
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