Cryptocurrencies are becoming so attractive that they are capturing the attention of the nation-states that are now testing them. For example, the government of Kazakhstan is now a major cryptocurrency miner, something that surprises many considering that most other governments have decided to take a lukewarm stance on cryptocurrencies.
According to Samson Mow, CEO of Blockstream, Bitcoin mining could be a very viable strategic investment for governments. Samson shared a tweet commenting on it.
It's a u-turn
Kazakhstan's decision to venture into large-scale, government-funded Bitcoin mining is a total change from its previous approach to cryptocurrencies. In 2018, the country's central bank (the National Bank of Kazakhstan) sought to draft a policy to make cryptocurrencies and their associated activities illegal in the country.
A few months later, the policy was rescinded and replaced with a friendlier approach to regulating cryptocurrencies. Then the Kazakh government started a project that saw several Bitcoin mining farms installed. About $ 190 million has been committed to the project.
Now, the government is committing even more funds to expand its Bitcoin mining operations. Bagdat Mussin, who is the current minister of digital development, recently announced plans to inject more than $ 700 million into Bitcoin mining operations. The country already operates 13 mining farms, with 4 more expected to come online soon.
With more than 10 large Bitcoin mining farms already operational, Kazakhstan contributes 6% of the global hash rate on the Bitcoin network. This sizable chunk can only be expected to grow larger as the country sheds more financial weight behind its already successful mining project. However, the country still lags behind other larger mining regions such as China, the United States and Russia.
In particular, one of the main reasons that Kazakhstan stands out in Bitcoin mining is its easy access to very cheap electricity from its coal reserves. In fact, some miners in China are already moving their mining operations to Kazakhstan to take advantage of cheap energy.
Kazakhstan's entry into Bitcoin mining as a government-backed project focuses on the broader global impact such a move could have. If more governments adopt cryptocurrency mining, it would only be a matter of time until cryptocurrencies, especially Bitcoin, achieve mass adoption.