Russia Considers Selling Power to Kazakhstan Amid Deficit Caused by Crypto Miners

State-owned Russian energy giant Inter RAO is now discussing electricity supplies for Kazakhstan where crypto miners have allegedly caused a spike in consumption this year. The country is expecting the power deficit to reach 600 megawatts as demand during the winter increases even further.

Kazakhstan Likely to Buy Electricity From Russian Federation to Deal With Shortages

Inter RAO, a major electricity producer in Russia, is holding talks on the possible supply of electricity for Kazakhstan starting from November, a high-ranking representative told reporters. Alexandra Panina, a member of the company’s management, explained that consumption growth in Kazakhstan is around 7%, noting that for the first time the country is facing a deficit in the cold winter months. Quoted by the Interfax news agency, she stated:

I am now discussing the possibility of commercial supply of Russian electricity to Kazakhstan in November.

Shortages in Kazakhstan are expected to amount to 600 megawatts (MW) when demand peaks during the upcoming winter season, and estimates suggest the deficit could exceed 1 gigawatt (GW) in the future, Panina added. She also revealed that Inter RAO is reviewing a request from Kyrgyzstan for additional supplies through Kazakhstan’s grid.

Crypto mining companies have been moving to the Central Asian nation attracted by its low energy rates amid an ongoing crackdown on the industry in China. Authorities in Nur-Sultan announced last week that electricity consumption has increased to almost 83 billion kilowatt-hours (kWh) in the first nine months of the year, stating that miners are mainly responsible for the surge.

Russia Blames Kazakhstan’s Booming Crypto Mining Sector for Supply Issues

Alexandra Panina singled out two main reasons for Kazakhstan’s current problems. She believes that its cap on electricity prices has led to insufficient investments in modernizing and upgrading the country’s exciting infrastructure and generation capacity. Then, the cheap electricity has brought many cryptocurrency miners into the country which was not prepared for the influx. Miners have become a big problem for Kazakhstan, the Russian energy executive stressed.

Electricity imports are banned by law in Kazakhstan unless the national grid operator KEGOC signals that there is a risk of power deficit, which is exactly the case right now. That makes it possible to source electrical power from the neighboring Russian Federation.

Earlier this month, during a meeting with Russian President Vladimir Putin, Russia’s Energy Minister Nikolai Shulginov said that his department is worried about Kazakhstan’s electricity deficit, caused by the energy-intensive extraction of digital currencies, among other factors, which had not been planned for.

“This affects the operation of our power plants, because they are used, firstly – in inefficient modes, secondly – we are often forced to quickly turn them on,” Shulginov complained at the Kremlin. Alexandra Panina confirmed that the issue has reached a “serious political level” and called for bringing it back to the commercial sphere while hinting that Russia may raise export rates for Kazakhstan.