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 persisting problems with electricity shortages and blackouts. The government has gone so far as to claim that illegal players in the sector are threatening 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 tasked the watchdog with identifying all enterprises minting digital currencies and verifying their tax, customs, and technical documentation. The agency was expected to conduct the checks together with other government bodies 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 media reports, Bolat Nazarbayev has been involved in cryptocurrency mining in Northern Kazakhstan. President Tokayev’s administration has been targeting business interests of the Nazarbayev family after quelling political unrest in January which affected miners as well.
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 Down More Than 50 Illegal Mining Farms
Government inspectors have also shut down 51 illegal crypto farms, the owners of which hadn’t notified authorities of starting activities or had connected their hardware to the power grid without permission. Some of these facilities had been located in special economic zones, evading tax 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 Monitoring Agency has filed 25 criminal cases and seized 67,000 units of mining equipment. The regulator claims the latest crackdown has helped to reduce 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 problems with energy supply have since forced some mining companies to relocate to other countries such as the U.S. The National Association of Blockchain and Data Center Industry of Kazakhstan recently revealed that authorized miners have already moved a third of their equipment out of the country.
Tags in this story
Coins, Crackdown, Crypto, crypto farms, crypto miners, crypto mining, Cryptocurrencies, Cryptocurrency, inspections, inspectors, Kazakhstan, Miners, mining, mining farms, Regulation, Regulations, regulator, Regulators, watchdog
Do you expect Kazakhstan to continue to clamp down on cryptocurrency mining? Share your thoughts on the subject in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
More Popular NewsIn Case You Missed It