Uzbekistan’s Ministry of Energy has introduced a new bill that threatens to check the cryptocurrency mining industry in the Central Asian nation.
It has been reported that a draft bill would lead in a sharp hike in the power rates charged to crypto miners industry participants who utilize powerful computers to record and secure transactions on blockchains.
However, the bill states that “to stimulate power saving, raise the effectiveness of power consumption in industries and the non-commercial sector, and to endorse the rational use of electricity,” businesses working with crypto assets, including miners, will be required to pay a rate three times that currently charged for their business category, no matter their power capacity.
The price of electricity for general consumers is currently around 3.5 cents per kWh. With mining being very energy-intensive, companies seek out jurisdictions with lower power costs in order to optimize their return on investment.
The draft bill is open for public comment until October 12. According to the posting on the Uzbekistan Government website, 9 comments and suggestions have been posted so far, with viewers who will be able to vote on their preferred answers.
Salvar Rasulev, an IT entrepreneur, argues that raising prices by just a factor of two would scare miners away, effectively closing the country off to the industry. Yet, mining is actually beneficial for Uzbekistan.
“Mining uses a lot of electricity but brings much more profit to Uzbekistan … Instead of supporting a business that would allow Uzbekistan to get hundreds of million dollars in export, which our president and our economy is demanding, you’re shutting down this opportunity and handing it over to other countries instead.” Salvar Rasulev
Likewise, another respondent, Srapionov Vladimir Ashotovich, takes the alternate view, stating that raising prices for miners is the right thing to do as they “don’t provide any significant product or service for the country and society” and are wasting valuable energy “heating the atmosphere.”
In general, most comments suggest that the government should accelerate the crypto industry in the country and take a differentiated approach to the electricity pricing depending on which power sources miners use.
Thus, Uzbekistan is self-sufficient in power, having major oil and natural gas reserves. Just like Russia and other countries that previously formed the USSR, it also has an abundance of industrial power stations left behind by the Soviet industrial machine.