Central Asia Might be the Next Hotbed for Chinese Bitcoin Miners Heading Overseas

Abundant coal, natural gas, cheap electricity, and sparsely populated and vast territory are making countries of Central Asia a perfect fit for bitcoin mining.

Compared to the thermal power cost of over $0.06 per kilowatt hour in China, an average electricity rates of $0.03 per kilowatt hour in some central Asian countries like Kazakhstan and Uzbekistan is attractive for Chinese miners.

Meanwhile, countries such as Uzbekistan, whose increasingly open policies on cryptocurrency mining and trading appear to be bringing what was once an “underground industry” to the fore.

Wu Zheng, one of the earliest bitcoin miners heading overseas, has his eye set on Kazakhstan where thermal electricity is abundant and cheap.

“Mining cost is mainly composed of mining machine cost, electricity rates, rentals for mining site, operation and maintenance cost, of which mining machine cost and electricity expense take up the majority, since cost for mining machine is basically fixed, the biggest variable is electricity cost. In this sense, finding cheap electricity is the best way to increase profitability.” Said Wu.

Take the latest-gen Antminer S17 pro for example, when the electricity is $0.06/kWh, an S17 pro could generate a daily profit of $5.41; when the electricity cost is $0.03/kWh, the same machine could profit $6.83 per day.

According to Wu, they usually set the latest powerful mining machines at home (China) and relocate old models such as S9, E10 and M3 to countries with cheaper electricity.

“My mining farm (in Kazakhstan) is running Ebit E10 machines which deliver a hashrate of 18T with the power consumption at 1800W.”

In his case, an E10 generates $0.45 per day running at the electricity costs of $0.06/kWh; if the electricity rates go down to $0.03/kWh, it could earn $1.75 per day, the profit increases by 288%. In comparison with the case of S17 pro above, we come to the conclusion that older mining models are more profitable providing cheaper electricity overseas.

According to public information, there’re currently 47 coal fields, coal-producing areas and coal-mining regions in Kazakhstan. 72% of the coal mined in Kazakhstan comes from open-pit mining, which is cheap and efficient. In addition, Kazakhstan has the world’s eighth largest coal reserves, with proven reserves of about 200 billion tons; Oil reserves there are about 5 billion tons, accounting for 3.2% of the world’s total proven reserves; Natural gas reserves are about 2 trillion cubic meters, or 1.5010% of the world’s total. These reserves also give the country huge potential for power generation.

“In Kazakhstan, coal-fired power costs as little as $0.001 per kilowatt hour because of the abundant coal source there,” Wu said, “in addition, private power generation is allowed in the country and the electricity we are using comes from private power plant.”

While enjoying high returns, miners like Wu also experienced great risks. For miners heading to Iran where electricity is claimed much more cheaper, getting their mining machines into the country is the first big trouble they have to face. While for miners eying on Kazakhstan, the problem is the weak industry foundation there. That means they have to build a mining farm from the scratch with immature heavy industry facilities.

Finding a reliable partner who could provide stable electricity is another problem these Chinese miners have to face in mining overseas. “What if he cuts you off and asks for higher prices?”

However, neither the risk of importing mining rigs, nor the difficulty of finding mines and stable electricity, could compare with the risks posed by local policies. “In fact, we have not been recognized by the local government for our mining activities,” said Wu.

But it seems the Central Asian area has been showing some encouraging signs on bitcoin mining. Last month, Kazakhstan’s neighboring country Uzbekistan announced that it is establishing a national mining pool and miners who join the pool will enjoy lower electricity rates; later in January, the country launched its first licensed crypto exchange and announced it prepares to exempt income obtained in crypto operations from taxation.

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