According to Kyrgyzstan's national news agency – Kabar, on July 27th, Kyrgyzstani President Sadyr Japarov approved the establishment of a crypto-mining farm at the Kambar-Ata-2 Hydro Power Plant.
The Kyrgyzstani government is set to invest up to $20 million in the construction of this cryptocurrency mining facility.
The idea was introduced as a measure to utilize the surplus of energy generated by the hydroelectric power plant in order to avoid energy losses, said Japarov.
Kyrgyzstan has lost over 6.8 billion kilowatt-hours of energy ever since the power plant was first opened back in 2010.
By utilizing the overproduced energy for crypto mining, the Kyrgyzstani government can generate revenue for the country’s budget, which ultimately benefits the Kyrgyzstani population.
Japarov also mentioned that crypto mining will be transparent and automated, as well as highly monitored, and used only for the benefit of the people.
Despite the recent promises, earlier reports vary on the energy sector of Kyrgyzstan. With the report from 24 July, where the Kyrgyzstani president announced the emergency state for the nation’s energy sector to begin on the 1st of August, this year, and last until the end of 2026.
The emergency state has been associated with the irregular inflow of water into the Naryn River, possibly caused by climate change. Thus, resulting in insufficient energy production for the evergrowing energy demands.
However, President Japarov has clarified that crypto mining will be subject to the highest tariff available in Kyrgyzstan, approximately 5 Kyrgyzstani Soms ($0.057) per kilowatt-hour.
Although, according to CoinMarketCap, the press office of the Kyrgyzstani government is yet to respond to media inquiries, it is evident that Kyrgyzstan's authorities perceive cryptocurrencies as a potential tool to boost the country's economy.
Karim Khanjeza, a Kyrgyzstani lawmaker, was advocating for the legalization of the cryptocurrency industry during a parliamentary committee meeting in early March 2022. He pushed the government to set a legal framework for digital assets, highlighting the potential economic benefits and quick growth.
But despite some regulations being introduced for the crypto exchanges as early as 2021, the country is yet to bring forth all-inclusive laws revolving around cryptocurrencies and other digital assets.
Furthermore, a former government official had previously asserted that cryptocurrency mining worsened Kyrgyzstan's energy crisis.
In conclusion, Kyrgyzstan's initiative to set up a cryptocurrency mining farm at a hydroelectric plant offers potential benefits in optimizing energy utilization and bolstering the country's financial reserves. However, this decision arises amidst an ongoing energy crisis, prompting concerns about the nation's energy priorities and long-term sustainability.
