Russia is getting ready to supply more electricity to Kazakhstan, so that their crypto mining farms can keep running. Thanks to this new deal, miners in Kazakhstan will be able to purchase power straight from Inter RAO, which is a major player in the Russian energy scene.
Crypto mining operations in Kazakhstan are now set to rely on electricity from Russia to run their hardware, which eats up a ton of energy. The two countries are going to tweak a previous agreement that covers how their energy systems work together.
Moscow's government has already started making the necessary adjustments to get the power flowing to support Kazakhstan's crypto miners, according to info from a Russian business news site.
With this new setup, Inter RAO can directly sell electricity to mining companies in Kazakhstan through commercial contracts. Kazakhstan, with its cheap and subsidized electricity, has drawn in a lot of mining firms since China put the clamps on its own crypto mining last year. This led to a big jump in electricity use, which caused power shortages and issues with the country's old energy infrastructure. Earlier this year, Kazakh officials had to temporarily shut down around 200 mining operations.
Well, if done properly so it also covers Kaza's non-crypto mining loads it's obviously good for crypto farms there. The main down side is that it of course gives Russia a non-scantionable source of income... The other drawback is that once the power start flowing it makes a large leverage point to make sure Kazakhstan tows the line towards Russia.
Thing is, as I recall many of the farms are/were located far away from Kaza's grid and were using power from local coal-fired plants. They will either have to relocate to where there are ties to the grid or someone needs to run transmissions out to those remote areas...
Bad news on top of bad news, the difficulty is going to have an 11% jump even before this thing comes to reality, so now we have to deal with the U.S large players who have an "unlimited" supply of money and the Kazakh's miners who will have dirty cheap power, all of this in the middle of a brutal bear market.
How is that a downside?
They did it last year because in November 2021 there was an unplanned (over the daily limit) daily flow of electricity from Russia to Kazakhstan amounted to 1.5 GW per day, Russia additionally provided 400 GW by the end of 2021. It's just that Inter RAO previously sold a significant amount of cheap electricity from the excess generation of Siberian hydroelectric power plants to China, but after the introduction of measures to squeeze out miners, the flow of electricity to Kazakhstan from Russia increased by more than 10%.