Illegal Crypto Mining Scheme Uncovered in Kazakhstan
In a significant crackdown, Kazakhstan’s Financial Monitoring Agency (AFM) and the National Security Committee (KNB) have uncovered an illicit cryptocurrency mining operation. This scheme illegally diverted over $16 million worth of electricity to crypto mining facilities.
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Kazakhstan Takes Action Against Unauthorized Crypto Mining
The authorities announced today the dismantling of a large-scale illegal mining operation in the East Kazakhstan Oblast. This operation illicitly sold electricity to cryptocurrency companies, power that was meant for the local population, essential services, and businesses of strategic importance. The stolen power was substantial enough to meet the needs of a small city in the region.
Utility Employees Involved in the Illegal Sale of Electricity
Over the past two years, employees from local utility companies were found to be complicit in selling electricity to these mining enterprises. The crypto mining operations consumed over 50 megawatt-hours (MWh) of electricity, an amount comparable to the power requirements of a city with a population between 50,000 to 70,000 residents.
Legal Constraints on Energy Consumption by Mining Farms
Under Kazakhstan’s existing regulations, mining farms are restricted to purchasing electricity through a state-controlled platform under the Ministry of Energy. Moreover, they are only allowed to acquire up to one MWh at a time. Despite these restrictions, the illegal operation managed to siphon off electricity worth over nine billion Kazakhstani tenge, which is approximately $16.5 million.
Seizure of Assets Acquired Through Illegal Means
The illicit gains from this operation were used to acquire two apartments in the capital and four vehicles. These assets have been seized under a court order, with the potential for confiscation pending further legal proceedings.
Regulatory Challenges in the Wake of China’s Mining Ban
Following China’s comprehensive ban on all crypto activities, including Bitcoin (BTC) mining, Kazakhstan emerged as a significant hub for the industry. Initially welcoming the influx, the country soon faced energy shortages and grid issues, leading to the implementation of stricter regulations.
Global Scrutiny of Unauthorized Crypto Mining
The crackdown in Kazakhstan is part of a broader regional trend where illegal crypto mining operations are attracting heightened scrutiny from governments. In a related development, Russia has issued warnings against unlicensed digital asset mining and has initiated a national registry for cryptocurrency mining hardware.
Alternative Strategies for Energy Utilization
Meanwhile, France’s far-right Rassemblement National party is considering repurposing surplus nuclear energy for Bitcoin mining, indicating a different approach to address the energy demands of this burgeoning industry.
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