The Kyrgyz Republic, a country in Central Asia, is reportedly ramping up its cryptocurrency mining capabilities with the support of the local government. Kyrgyz President Sadr Japarov has agreed to establish a cryptocurrency mining farm at the Kambar-Ata-2 hydroelectric power plant, as reported by Kyrgyz state news agency Kabar on July 27.
To build the cryptocurrency mining facility, the Kyrgyz government plans to allocate $20 million. President Japarov mentioned that operating crypto mining farms would help prevent energy losses associated with power plants not utilizing electricity effectively. He stated that since the launch of Kambar-Ata-2 in 2010, Kyrgyzstan has lost 6.8 billion kilowatt-hours (kWh) of energy due to this problem. By setting up the mining farm, the Kyrgyz government aims to make better use of surplus energy and generate revenue for the state budget. President Japarov explained That the money earned from the mining operations would benefit the electrical engineers and ordinary people, emphasizing that the energy consumption would be controlled and automated.
The report, however, seems contradictory to recent energy-related news in Kyrgyzstan. On July 24, the President declared a state of emergency in the country's energy sector, scheduled to last from August 1, 2023, to December 31, 202 6. This measure is taken in response to climate challenges, low inflows to the Naryn River Basin, and insufficient power generation capacity caused by excessive energy consumption. In contrast, Japarov's recent statement highlights that cryptocurrency mining will be taxed at the highest rate in Kyrgyzstan, approximately 5 Kyrgyz soms ($0.057) per kilowatt.
Nonetheless, government authorities in Kyrgyzstan appear to be increasingly interested in cryptocurrencies as an opportunity to bolster the local economy. In March 2022, Kyrgyz MP Karim Khanjeza urged the authorities to legalize the cryptocurrency industry during a parliamentary committee meeting. He called for the development of a legal framework for cryptocurrencies, citing their rapid growth.
While Kyrgyzstan has introduced some regulations for cryptocurrency exchanges in 2021, it has not enacted any cryptocurrency-related laws so far. In the past, a former government official believed that cryptocurrency mining played a significant role in contributing to Kyrgyzstan's energy crisis.
