Kazakhstan is on a transformative journey, modernizing its energy system through digital mining initiatives while aiming to expand crypto trading opportunities beyond the confines of the Astana International Financial Centre (AIFC). This ambitious strategy reflects a broader vision to intertwine digital technology with traditional sectors, creating a more robust and sustainable economy.
In a recent op-ed featured in Kazakhstanskaya Pravda, Kanysh Tuleushin, the First Vice Minister of Digital Development, Innovation, and Aerospace Industry, articulated the government’s forward-thinking approach. By leveraging digital mining, the aim is to revamp the country’s energy infrastructure, significantly boosting efficiency in power generation and consumption. The cornerstone of this initiative is a proposed “70/30” model, wherein foreign investment would finance upgrades to thermal power stations. Remarkably, 70% of the newly generated energy would be directed to the national grid, while the remaining 30% would support mining operations. This model draws inspiration from similar practices in the United States, where crypto miners balance power supply by absorbing excess energy during low-demand periods, providing stability to the overall system.
Tuleushin elaborated on another critical aspect of the plan: utilizing associated petroleum gas—the byproduct of oil extraction that is often flared and wasted—to generate electricity for mining farms. This innovative approach not only minimizes environmental impact but also creates new revenue opportunities for oil producers. By harnessing these often-overlooked resources, Kazakhstan can champion a greener energy paradigm while simultaneously stimulating its digital economy.
The rising prominence of digital mining in Kazakhstan is evident in its financial contributions. Over the past three years, this burgeoning sector has generated approximately $34.6 million in tax revenue. As of 2023, the country has registered over 415,000 pieces of mining equipment, issued 84 licenses, and accredited five mining pools. This growth illustrates the vast potential of digital mining within Kazakhstan’s economic landscape.
In parallel with its mining initiatives, Kazakhstan is exploring the expansion of crypto trading regulations beyond the AIFC, a special economic zone with its own legal framework. Crypto trading volumes within AIFC exchanges saw a substantial increase, jumping from $324.2 million in 2023 to a staggering $1.4 billion in 2024. However, experts highlight that the overall digital asset transaction volume in Kazakhstan reached $4.1 billion in 2023, with a significant 91.5% occurring outside regulatory oversight. This discrepancy presents a vital opportunity for the government to harness potential tax revenues and promote stability in the crypto market.
“… if all restrictions were lifted and digital asset trading was allowed across Kazakhstan, the impact could be significant. Flexible rules would attract major players, as we saw in the UAE. Kazakhstan might become Central Asia’s crypto hub, competing with Uzbekistan and Kyrgyzstan, which have also embraced the market. Legalizing the gray zone would bring billions of tenge into the budget. For example, just a 10% tax could generate more than 190 billion tenge per year ($372.9 million), enough to construct dozens of new schools and hospitals from scratch,” the minister elaborated.
To capitalize on this potential, Tuleushin has proposed the introduction of flexible crypto trading regulations outside the AIFC. He indicated that the Ministry of Digital Development is crafting proposals for transparent crypto exchanges and automated teller machines (ATMs) dedicated to digital currencies. However, the successful implementation of these measures hinges on effective collaboration with the National Bank of Kazakhstan and the Financial Market Regulation Agency.
Additionally, Kazakhstan is gearing up to broaden the use of its digital tenge, designed to enhance accountability and traceability in public spending. The pilot project for this Central Bank Digital Currency (CBDC) has already circulated 250 billion digital tenge, employing unique digital tags to monitor expenditures. These innovations signify Kazakhstan’s commitment to boosting transparency and efficiency in its financial system, setting a precedent for other countries in the region and beyond.
