What happened
On 20 October 2021 KEGOC, the company that operates Kazakhstan's transmission grid, published a statement saying that consumption by digital mining had passed 1,000 MW and that the country's unified power system was drawing more power than it was generating.
Two days later, Order No. 325 of the acting Minister of Energy amended the System Operator Rules. The operator may now restrict or reduce the planned supply of electricity to persons carrying out digital mining where there is a shortage of electricity or generating capacity, or to prevent emergencies (full text, in Russian). Supply companies that fail to carry out a curtailment order face penalty coefficients in the capacity market.
Curtailment had already started without it. On 5 October KEGOC cut 68 MW from Enegix, a registered miner.
What it changes
It writes into law what grid engineers already knew: a mining farm is the easiest large load in the country to switch off.
A grid has to match generation and demand continuously. When it cannot, something has to go, and most large industrial loads are terrible candidates. An aluminium smelter whose pots cool down is ruined. A steel furnace mid-heat is ruined. Hospitals and pumping stations are not options at all. A hall of mining machines can go to zero in seconds, suffer nothing worse than lost revenue, and be back at full draw minutes later.
That is why miners go first. It is worth noticing that this is the same property that makes the load attractive to a grid operator in a system with spare capacity, where being interruptible is something you get paid for. Here there is no spare capacity, so it is simply the order of the queue.
What it does not change
Mining did not, by itself, create the shortage. On 14 October three generating units failed within hours of each other: Ekibastuz GRES-1 (500 MW), GRES-2 (500 MW) and the Eurasian Energy Corporation plant (150 MW), taking more than 1,000 MW off an already tight system. Mining added roughly its own 1,000 MW of demand to an ageing coal fleet that was failing on its own account.
It is also not a ban. Miners can operate, and are being told that they operate last.
Nor does it reliably separate licensed operators from unlicensed ones. Enegix was registered, and was cut by name three weeks before the order existed.
And it changes nothing about the network. If enough machines go dark for long enough, difficulty retargets and blocks return to roughly ten minutes at whatever hashrate remains.
Context
Kazakhstan became a mining destination very quickly. The Cambridge Centre for Alternative Finance mining map puts its share of global hashrate at 1.4 percent in September 2019, 8.2 percent in April 2021 and 18.1 percent in August 2021, most of that jump arriving after China ordered its own miners to stop. The map is built from the reported locations of three or four pools covering roughly a third of the network, geolocated by IP address, so treat it as an indication rather than a census.
The state had already moved to price the load. A law signed on 24 June 2021 inserted a charge for digital mining into the Tax Code at 1 tenge per kilowatt-hour, effective 1 January 2022.