Bitcoin mining was booming in Kazakhstan. Then it was gone.
De Vries, the researcher, says that even if miners switch to cleaner energy sources, the industry will still not be sustainable. All he will do is crowd out other clean energy consumers to perform a function he says is totally unnecessary.
In September, Ethereum, the second most traded cryptocurrency, abandoned the “proof of work” model for generating coins – i.e. mining – for “proof of stake”, a complicated cryptographic process that does not require brute force computation. The power consumption of the Ethereum network dropped by 99.95% after the change, according to the Ethereum Foundation, which oversees the network. This highlighted just how wasteful bitcoin mining is, de Vries says. Rather than looking at what industry produces, he says, it’s instructive to think about all the wrong assumptions machines make – quintillions of them every second, creating nothing but heat and carbon.
“You have quite a large industry that consumes as much energy as a country like Argentina, just to generate random numbers that are immediately rejected… It’s something you can’t really do in a sustainable way “, he says. “We are in an energy crisis and a climate crisis, and we are using fossil fuels to run the largest random number generator in the world.”
Measuring Bitcoin Mining Activity maybe in what’s left. Turegeldy Turanov participated in the construction of three mines in Ekibastuz as deputy regional manager of BTC.kz, a local data center company. Now he takes them apart.
At its peak, just one such facility on the outskirts of town operated 10,500 machines, consuming 35 megawatts of electricity 24 hours a day, seven days a week. By the end of October, most of its lockers were empty. Bare wires hung from the walls. On the upper gantries, certain machines were rusting in place; on the ground floor, others were packed in cardboard boxes to be sent back to their owners abroad.
Without the machines running, it was freezing cold inside the BTC.kz mine. Turanov, a large man in his twenties, wearing a cap and a vest, heaved a deep sigh. “Jobs are being lost,” he said. “Before, we employed 70 people. Now we are only 30 years old. A lot of effort and work has gone into this. It’s like your child is dying.
There are still elements of bitcoin boosterism in evidence in Kazakhstan. A miner said he was betting on the collapse of the ruble because of international sanctions against Russia, which would mean the price of imported electricity would fall; another was convinced that the price of a bitcoin would surpass $100,000 in 2023, and is holding out until it does. Others, including Enegix’s Turgumbayev, believe the market is about to turn around because since its assault on bitcoin mining, the Kazakh government has found new enthusiasm for cryptocurrencies.
In September, President Tokayev led a technology conference in Astana, where he promised “full legal recognition” of crypto assets. This would mean that miners would finally be able to legally convert bitcoin and other cryptocurrencies directly to tenge and vice versa, and the crypto could eventually be used to pay for goods and services in Kazakhstan. The Astana International Financial Center runs a “regulatory sandbox” for crypto companies, allowing exchanges to register, so they can allow consumers to buy and sell crypto legally. Binance, the largest crypto exchange in the world, has set up a local office and is participating in the sandbox.