Despite efforts to bring the entire industry out of the shadows, unauthorized mining operations continue to cause economic damage to Kazakhstan.
According to the latest estimates, the amount of losses suffered by the country in the past few years is well over 1 billion Kazakh tenge, but the government has managed to recover some in the form of seized digital assets.
An underground mine stole the city’s electricity.
Kazakhstan’s financial authorities estimate that illegal cryptocurrency mining facilities have cost the country around 1.3 billion tenge (more than $2.3 million) in revenue since the beginning of 2024.
The country’s Financial Supervisory Authority (AFM) announced on Thursday that investigators had opened 17 criminal cases during the same period.
Most of the illegal Bitcoin farms were found in and around the capital Astana (5 cases), the city of Shymkent in southern Kazakhstan, and the city of Kostanay in the north (3 cases each), the agency detailed.
“As part of these incidents, $642,000 in digital assets were seized and confiscated,” AFM noted in a press release, which also highlighted:
“It should be noted that some illegal mining farms operated by stealing electricity that rivaled the consumption of large cities. In some cases, the rights of residents living near noisy farms were violated.”
The Observatory stressed that the illegal use of electricity for coin minting deprives other businesses, industrial projects, development projects and social infrastructure of needed energy resources.
A crypto mining boom in Kazakhstan following China’s ban several years ago initially caused major power shortages across Central Asian countries.
Governments have addressed this issue through regulation and pricing, and the problem has largely been resolved, at least as far as licensed crypto miners are concerned.
However, unregistered mining operations, often powered by illegally supplied electricity, remain a major challenge for authorities.
Kazakhstan collects more than $30 million in taxes from mining sector
Separately, Kazakhstan has largely benefited from the influx of miners after adopting rules for the growing industry, such as selling minted digital currencies on nationally recognized exchanges and taxing profits by the state.
In a post on its Telegram channel, AFM cited data from the state revenue commission and acknowledged that crypto mining has generated more than 17 billion tenge (more than $31 million) in state budget revenue.
The agency also reminded that mining companies can only operate in Kazakhstan if they obtain the respective license. He further emphasized that:
“Legal mining operations require equipment verification, energy supply contracts and tax compliance.”
The AFM also stressed that the opposite would “involve criminal liability, undermine the country’s economic security and lead to power outages.”
The regulator called on entrepreneurs and Kazakh citizens to refrain from participating in illegal mining and support the development of a transparent digital asset market in the country.
Kazakhstan aims to become a regional crypto hub. The country was recently visited by Chao Changpeng (CZ), founder of cryptocurrency exchange Binance, and Pavel Durov, owner of the popular Telegram messenger. They met with President Kassym-Jomart Tokayev and attended a major technology forum.
The Financial Supervisory Agency is also active in other areas. Earlier this week, the company announced the decommissioning of its platform, known as the RAKS exchange, perhaps the largest crypto laundering service in the post-Soviet space.
Last month, Kazakhstan busted a large-scale cryptocurrency Ponzi scheme and seized $10 million in digital assets collected from fraudulent investors in Central Asia and parts of Eastern Europe, Cryptopolitan reported.