According to recent reports, Kyrgyzstan’s president, Sadyr Japarov, has given the green light for the construction of a hydro-powered crypto-mining facility. The government is set to invest approximately $20 million to establish the facility at the Kambar-Ata-2 Hydro Power Plant.
The primary objective of this mining facility is to utilize the unused energy from the hydropower plant, which has experienced significant energy losses since its launch in 2010, totaling about 6.8 billion kilowatt-hours (kWh). Instead of letting this energy go to waste, the government aims to harness it for the benefit of the country’s economy.
President Japarov has also pledged to distribute the profits generated from the crypto-mining facility among ordinary citizens. He stated, “The earned money will go to the power engineers, or, to be more precise, to the ordinary people.” He further assured that every kWh generated will be closely monitored and managed by power engineers, with an automated system in place for transparency and control.
Interestingly, a recent report by Kabar indicates that President Japarov plans to impose the highest tariff on crypto mining in Kyrgyzstan. The government sees the cryptocurrency industry as a potential economic booster, and back in March 2022, a lawmaker named Karim Khanjeza urged the authorities to legalize the cryptocurrency industry and establish a proper legal framework. Despite introducing regulations for crypto exchanges in 2021, Kyrgyzstan has yet to enact any specific crypto-related laws.
However, it is worth noting that this move comes amid a backdrop of energy challenges in the country. On July 24, the Kyrgyz President announced a state of emergency in the energy sector, starting from August 1, 2023, until the project’s completion on December 31, 2026. Official data attributes the emergency to climate challenges, low water inflow into the Naryn River basin, and insufficient generating capacity due to excessive energy consumption.
Last year, in a report by Todayq News, the government of Kyrgyzstan claimed that crypto had no value. This statement came at a time when crypto investors were rapidly increasing their investments. Along with it, The National Bank of Kyrgyzstan (NBK) expressed concerns about the potential for high exchange rate volatility and the possibility of losing value with cryptocurrencies. They also highlighted worries about conducting transactions in cryptocurrency, as there is no central authority overseeing these transactions. Now, there is a 180-degree shift by the government of Kyrgyzstan, as they now see cryptocurrency as an economic booster.