City Power Grid Hit by Illegal Crypto Miners, Kazakhstan Shuts Network Down

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Kazakhstan’s energy regulators have dismantled a major illegal cryptocurrency mining operation that was secretly draining massive amounts of power from a city’s electrical grid. The Ministry of Energy confirmed that the illicit setup was discovered in an industrial zone during a targeted inspection campaign. According to authorities, dozens of high-performance ASIC and GPU-based mining rigs were operating without proper licenses, siphoning several megawatts of electricity — an amount equivalent to powering hundreds of residential homes.

Officials reported that the illegal miners had bypassed official metering systems, making it impossible to track consumption and resulting in millions of tenge in unpaid electricity costs. The excessive load on the grid led to frequent blackouts and voltage drops in nearby residential and commercial areas, sparking complaints from local residents and businesses.

Key Facts:
Kazakh authorities shut down a $16.5M illegal power scheme.
Mining firms received over 50 megawatt-hours of electricity in violation of rules.
Kazakhstan is tightening mining regulations while advancing plans for a state crypto reserve.

Part of Kazakhstan’s Wider Crypto Crackdown

Kazakhstan has become one of the largest global hubs for cryptocurrency mining, particularly after China’s mining ban in 2021 forced many operators to relocate. The country’s low electricity rates and relatively favorable regulations initially attracted miners, but the rapid influx caused unforeseen strain on its aging energy infrastructure.

In response, the Kazakh government introduced strict licensing requirements in 2022, mandated energy quotas for miners, and increased tariffs for high-consumption operations. Authorities also launched nationwide inspections to identify illegal mining farms operating without state approval.

This latest shutdown is part of that enforcement wave, with officials confirming that all confiscated equipment will remain under state custody until the completion of a criminal investigation. The individuals or organizations behind the operation could face heavy fines, confiscation of assets, and potential prison sentences under Kazakhstan’s energy theft laws.

Impact on Kazakhstan’s Crypto Mining Industry

The crackdown highlights the ongoing tension between economic benefits from legal crypto mining and the risks posed by illegal setups. While registered miners contribute to the economy through taxes and regulated energy payments, unlicensed operators undermine the system, drain critical resources, and damage the country’s reputation among international investors.

Kazakhstan’s Ministry of Energy reiterated that responsible and licensed crypto mining remains legal, but warned that future inspections will target unregistered facilities, including those hidden in private warehouses, factories, and even basements. The government’s stance is clear — unlicensed mining will not be tolerated, and offenders will face swift enforcement action.

Global Context

Kazakhstan’s situation reflects a broader global challenge, as countries grapple with the energy-intensive nature of cryptocurrency mining. From the U.S. to Iran, unlicensed miners have been caught exploiting subsidized electricity or bypassing meters entirely. Governments worldwide are now working to strike a balance between supporting blockchain innovation and protecting critical infrastructure from excessive strain.

Jake Gordon

With years of proven expertise in the cryptocurrency space, Jake Gordon is a respected voice in blockchain, cryptography, and digital asset innovation. A dedicated student of cryptography, he combines academic knowledge with real-world insights, specializing in crypto presales, ICO analysis, and algorithmic advancements. Known for his deep market research, technical precision, and forward-looking perspectives, he helps readers navigate the fast-paced world of crypto with clarity, credibility, and passion.

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