When China shut down crypto mining in 2021, thousands of mining rigs packed up and moved east - straight into Kazakhstan. What started as a quick win for the country’s economy quickly turned into a power crisis. By 2025, crypto miners were using more electricity than entire cities. The government had to act. So they didn’t just raise rates or slap on fines. They built a full state-controlled system to ration electricity like it was wartime fuel. And it’s working - mostly.

The Grid Wasn’t Built for Miners

Kazakhstan’s power grid was designed for factories, homes, and state-run infrastructure. Not for row after row of ASIC miners running 24/7. When Chinese operators arrived with billions of dollars in equipment, they didn’t ask permission. They just plugged in. Within two years, crypto mining consumed over 30% of the country’s total electricity output in some regions. In the winter, when heating demand spiked, schools and hospitals started experiencing blackouts. The government couldn’t ignore it anymore.

How the Rationing System Works

In 2023, Kazakhstan launched its state-run electricity marketplace. No more private deals. No more shady contracts with local utilities. Every legal miner must buy power through the Ministry of Energy’s platform - and they can only buy 1 megawatt-hour per transaction. That’s about what 100 home air conditioners use in an hour. To run a 10-megawatt farm, you need to make 10 separate purchases a day. It’s not just a limit - it’s a bottleneck.

To get even that much, you need a license. There are only 84 licenses available. You also have to register every single mining machine in a national database. As of 2023, that’s 415,000 machines tracked down to the serial number. You can’t just buy a few rigs and start mining. You need paperwork, legal counsel, and a relationship with one of the five government-approved mining pools.

And here’s the twist: you have to sell 75% of your mined cryptocurrency on the Astana International Financial Centre (AIFC) platform. That’s up from 50% in 2024. The government wants to control the flow of crypto out of the country - not just the electricity going in.

The .5 Million Heist

But not everyone plays by the rules.

In October 2025, authorities in East Kazakhstan Oblast uncovered a massive illegal mining ring that had been stealing electricity for two years. Utility workers - people with access to meter readings and grid controls - were diverting power meant for hospitals, schools, and apartment buildings to hidden mining farms. The stolen energy? Over 50 megawatt-hours. That’s enough to power 60,000 people. The cash from selling the mined Bitcoin bought two luxury apartments in Nur-Sultan and four new cars. All of it was seized.

This wasn’t an outlier. It was a symptom. The system works for those who follow the rules. But corruption runs deep. And the grid is still vulnerable.

Who Wins? Who Loses?

The rationing system has reshaped the mining industry in Kazakhstan. Big players with capital - like Bitfarms or Core Scientific - can afford the legal fees, the compliance teams, and the time it takes to navigate the bureaucracy. They’ve even improved their efficiency by 40% over the past year, dropping their power use to 22.5 watts per terahash. That’s world-class.

Small operators? They’re getting squeezed out. One miner in Almaty told investigators he had to shut down his 100-rig farm because he couldn’t afford the compliance costs. The 15% tax on profits, plus the 10-15% of operating expenses spent just on paperwork, made it unprofitable. He’s now working as a technician for a licensed farm.

The government says this is intentional. They want high-value, compliant mining - not a wild west of underground rigs draining the grid. But critics argue it’s just creating a cartel: a few big companies with licenses, and everyone else either leaves or goes dark.

The Bigger Picture

Kazakhstan’s approach is unique, but it’s not isolated. Russia is now tracking every mining rig with a national registry. France is testing how to use idle nuclear plants for Bitcoin mining. Even Texas, the old mining capital, is debating whether to cap energy use for miners during peak demand.

Kazakhstan’s 70/30 energy proposal - where foreign investors fund new power plants, and 70% of the output goes to the public grid while 30% is reserved for miners - could be the next step. It’s not about stopping mining. It’s about making it sustainable.

The world is watching. If Kazakhstan can balance economic growth with energy security, it could become the model for other countries trying to tame the crypto mining beast. But if the corruption keeps leaking, and the grid keeps failing, then this rationing system won’t last. It’ll just be another failed experiment in controlling the uncontainable.

What’s Next for Crypto Mining in Kazakhstan?

Legislators are now talking about decriminalizing crypto trading for people using licensed platforms. That’s a big shift. It means the government might start treating crypto not as a threat, but as a financial asset - if it’s regulated.

The East Kazakhstan case is still under investigation. More arrests are expected. More utility employees will be fired. And the Ministry of Energy is rolling out new AI-powered monitoring tools to detect abnormal power usage in real time.

For miners who still want to operate legally, the path is clear: get licensed, register every rig, buy power through the state platform, sell 75% on AIFC, pay the tax, and keep meticulous records. It’s expensive. It’s slow. But it’s the only way left.

For everyone else? The lights might go out before you get the chance to plug in.