China’s largest crypto exchange imposes stricter fiat transactions, miners flock to Kazakhstan amid government crackdowns

• Chinese government recently imposed a crackdown on cryptocurrency mining and trading.
• The restrictions have adversely affected crypto-related businesses
• Kazakhstan is significantly wooing miners with some of the world’s cheapest electricity and pro-crypto legislation.

Although China has not banned crypto ownership at an individual, its crackdown has adversely affected the adoption of crypto assets. In May, the Chinese government asked financial institutions like banks and other payment platforms to stop providing clients with any services associated with cryptocurrencies.

Consequently, a number of crypto firms have closed down their businesses while others have shifted their business locations. For example, BTC China (BTCC), which runs the oldest Bitcoin exchange in the country, recently announced the closure of its crypto trading business amid the country’s crackdown on Bitcoin mining.

Although China has long been the home for more than 50% of the world’s Bitcoin miners, the country currently wants them out as soon as possible. In the month of May, China’s government imposed several crackdowns on Bitcoin mining and trading, resulting in “the great mining migration.”  The exodus is currently underway, and it could be a game-changer for Kazakhstan.

Meanwhile, as the crypto crackdown continues, China’s largest crypto exchange Huobi has put more strict measures for fiat currency transactions. According to Huobi, all users can make crypto withdrawals only 24 hours after making their purchases, and some users need 36 hours. Since some people in China are known to use crypto coins to launder money, Huobi has launched the “Limited time limit withdrawal” to make it more difficult for people who use black money to purchase cryptocurrencies to transfer away.

Kazakhstan positions itself for incoming miners

Kazakhstan, which is China’s next-door neighbor, has become the most potential destination of choice. The central Asian country of Kazakhstan is rapidly becoming a new hotspot for the crypto mining industry, following an exodus of mining operations from China.

Since it is a major producer of coal, Kazakhstan’s coal mines provide a low-cost, abundant energy supply. While the government has building-friendly policies which make it easy to construct offices quickly, such a lax attitude about building bodes well for crypto miners who need to construct physical installations in a short period of time.

Chinese Bitcoin mining firm BIT has already shifted 320 mining machines to the former Soviet Republic, and another 2,600 are expected to arrive soon.

Although Chinese government electricity plants have restricted mining, private electricity plants continue to service crypto miners. However, most of the electricity is produced by the government’s power plants, therefore, miners have no choice but to move, and this makes them desperate to find other locations.

Energix, one of the biggest cryptocurrency mining companies in Kazakhstan, is working with miners preparing to scale up amid increasing demand for its services. The crypto mining company is in talks with other firms, mostly from China, to invest in building new mining facilities in various locations in Kazakhstan.  

While the logistics of moving from China to Kazakhstan appears to be more straightforward, the journey to the Old Silk Road may not be easy across the pacific. 

Kazakhstan appears to have attracted a lot of interest among Chinese miners that some stakeholders say that the country may be running out of capacity to accommodate more.  Besides that, Kazakhstan is known to have plans to introduce a tax on power consumption by cryptocurrency miners. A new bill, which forms part of amendments to the tax code, is under review in the Senate. If passed, then it would require miners to pay one tenge (about US$0.0023) per kilowatt-hour for the electricity they use.