More than 100 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.
Financial Watchdog Goes After Crypto Miners Across Kazakhstan
The rapid expansion of crypto mining in Kazakhstan, since last year’s crackdown on the industry in China, has been blamed for ongoing problems with power shortages and blackouts. The government has gone so far as to claim that illegal players in the sector threaten the country’s economic security.
Following inspections ordered by President Kassym-Jomart Tokayev, 55 mining farms have “voluntarily” closed down, Kazakhstan’s Financial Monitoring Agency announced Tuesday. They have completely suspended activities, dismantled and removed their equipment from a number of locations.
In February, Tokayev instructed the watchdog to identify all companies that mint digital currencies and verify their tax, customs and technical documentation. The agency was to complete the checks with other government agencies and report back by mid-March.
Some of the mining companies that have ceased operations are affiliated with well-known entrepreneurs in Kazakhstan like Alexander Klebanov from Pavlodar region and Bolat Nazarbayev, brother of former president Nursultan Nazarbayev, who ruled the country for decades after the dissolution of the Soviet Union.
According to the media, Bolat Nazarbayev was involved in cryptocurrency mining in northern Kazakhstan. President Tokayev’s administration is targeting the business interests of the Nazarbayev family after calming political unrest in January that also affected miners.
Other public figures with alleged investments in cryptocurrency mining include the former chairman of the board of the Qazaqgaz energy company, Kairat Sharipbaev, and Erlan Nigmatulin, a prominent businessman from Karaganda region.
Inspectors close more than 50 illegal mining operations
Government inspectors also shut down 51 illegal crypto farms, whose owners failed to notify authorities of the start of operations or connected their equipment to the power grid without permission. Some of these facilities were located in special economic zones, evading taxes and customs duties.
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 Surveillance Agency filed 25 criminal charges and seized 67,000 units of mining equipment. The regulator says the latest crackdown helped cut energy consumption in the country by 600 MWh.
The lack of sufficient regulation of mining and cryptocurrencies, the agency warned, creates risks for the country’s financial system and its citizens. Its representatives are participating in a working group tasked to develop new legislation for the crypto industry together with experts from the ministries of digital development, energy, and finance.
Kazakhstan became a crypto-mining hotspot in 2021, but energy supply issues have since forced some mining companies to relocate to other countries like the United States. of their equipment outside the country.
