Is Central Asia the New Safe Haven for Crypto Mining Amid Iran-US Crisis?

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Recently, the cryptocurrency mining community has been shaken with rumors of Chinese miners leaving Iran - where crypto mining is authorized as an industrial activity - for Central Asia.

Iran's attraction for crypto mining operations lies in subsidized electricity rates - as of July, 0.7 cent per kilowatt-hour, - which had purportedly even prompted miners from mining centers such as China to relocate their operations to the country.

The welcoming environment for crypto mining farms also pertains to Iran's effort to transform into a hub for digital currency and blockchain adoption in response to escalating economic sanctions imposed by the U.S.Following the legalization of crypto mining in the country, the Ministry of Industry, Mine and Trade began issuing licenses for the activity, which resulted in a surging demand.

At the time, Mostafa Rajabi, a spokesman of Iran's Energy Ministry, also said that the government was going to revise existing regulations and eventually disconnect crypto mining facilities from the national electric supply network during peak hours of consumption in Iran, which span about 300 hours a year.

Although the crisis arguably inspired some new respect for Bitcoin - whose price skyrocketed from $7,000 to nearly $8,500 supposedly due to the tensions between the two countries - and other cryptocurrencies, it provoked an outflow of crypto miners from Iran.Safe haven in Kazakhstan, Uzbekistan and Kyrgyzstan?Chinese Bitcoin miners are now reportedly responsible for as much as 66% of the global BTC hash rate, which is likely to be a result of applying more advanced mining hardware.

Central Asian countries like Uzbekistan and Kyrgyzstan attract crypto miners with extremely low electricity tariffs as well, which makes them direct competitors to neighboring Iran.

Kazakhstan - where households pay $0.045 per kWh - is ostensibly developing legislation that will exempt crypto miners from tax obligations until the mined crypto is exchanged for fiat money.

"The position of the government towards mining is not clear. Also, Kyrgyzstan is a country where most of the mining equipment is contraband," Dorjiyev said.

"Overall conditions for mining in Central Asia are truly favorable only in Kazakhstan. Mainly due to excess of electricity and overall openness of the economy towards investments in the IT sector. Plus, the draft of the new bill has already been passed to parliament, we expect it to be approved by June this year."

While Uzbekistan, Kazakhstan and Kyrgyzstan are luring crypto mining operators promising favorable conditions, none of the countries has recognized digital currency as a legal tender or has an official position regarding digital assets.

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