Kazakhstan Turns to Flare Gas to Power Crypto Mining Revival

Kazakhstan Works Towards Bringing Crypto Miners and Flare Gas Energy Together

The government of Kazakhstan is trying to rearrange its crypto mining industry around a power source already being developed in other nations: flare gas.

After President Kassym-Jomart Tokayev signed the “On measures to stimulate and develop the digital asset industry in the Republic of Kazakhstan” decree in July, which called for a bill to provide a mechanism for companies to take advantage of gas opportunities in the digital mining field, there has been a rise in miners’ interest in these possibilities.

While Kazakhstan experienced a crypto mining boom in 2021, the energy footprint of these companies took its toll on the country’s aging infrastructure. The government cracked down on these activities and established an auction system to control how much power was used to mine digital assets, driving most of the industry out of the country.

Daniyar Mubarakov, Head of the Blockchain and Digital Mining Association, told Euro News that miners were ready to purchase and install equipment to convert this flare gas into usable power. He also estimated that the total flared gas production of Kazakhstan could be turned into 1.2–1.3TWh.

Depending on the location, an oil field could power a medium or large digital center or bitcoin mining farm. The strategy is seen by both miners and oil companies as a win-win association, as the former buy the gas at lower prices for their activity, and the latter profit from selling it, avoiding paying disposal fees that reach into the millions.

Batyr Bauyrzhan, Technical Director of WES LLP, a power solution integrator, also highlighted that this solution lets miners lock in power prices for years and avoid depending on grid-based solutions whose tariffs can fluctuate.

The Ministry of Energy estimates that up to 60 oil fields produce flare gas, highlighting ample opportunities for several companies to set up shop and start operating.

Gizzat Baitursynov, Kazakh Vice Minister of AI and Digital Development, revealed that a legal framework to clarify the rules that companies would follow was under development, stressing that this new mechanism is “highly beneficial” for the country, as it will allow the government to profit and improve the environment all at once.