In recent years, Central Asia, including the Republic of Kyrgyzstan, has become a hotspot for cryptocurrency mining. As a result of the ongoing crackdown on the industry in China, companies that extract digital coins have been attracted by its low energy rates. Many countries have been trying to mitigate a growing power deficit due to the influx of miners. In early October, reports disclosed that Kyrgyzstan had raised the electricity tariff for crypto mining enterprises, among other consumers, citing the energy-intensive nature of their operations. Kazakh lawmakers have proposed a similar measure.
Additionally, authorities in Bishkek have been going after underground cryptocurrency miners. The law enforcement agencies in the capital city and Chuy region seized 2,000 mining devices from several locations minting digital currency outside of the law in May.
An operation similar to this one recently was conducted by the State Committee for National Security (GKNB) in the town of Druzhba, Issyk-Ata region. According to a media report, its officers have seized another 2,500 mining machines. Cryptocurrency mining causes “colossal damage” to the country’s electricity grid, according to the state committee. GKNB has also uncovered several large industrial enterprises that supply electrical power to illegal crypto farms.
Apparently, the data center, which was running in a greenhouse, was being operated by foreigners, according to a press release issued by the department and quoted by Sputnik Kyrgyzstan. Additionally, the GKNB notes that their illegal activities caused colossal damage to the electric networks of Kyrgyzstan. Investigators are now assessing the state’s losses and determining whether the mining hardware was imported legally into the country. In addition, the committee is seeking to identify all participants in the project.
Kyrgyzstan has taken steps to regulate its growing crypto mining industry. A bill introducing mining taxation was presented by the Ministry of Economy in August 2020. To mint digital currencies, the government proposes a 15% tax levy. As part of the law, mining companies are also required to register with regulatory bodies so that they can operate legally in the country.