Uzbekistan’s Ministry of Energy has introduced a new bill that threatens to stifle the cryptocurrency mining industry in the Central Asian nation.
Published on Friday, the draft bill would usher in a sharp hike in the power rates charged to miners – crypto industry participants who use powerful computers to record and secure transactions on blockchains.
The bill states (via translation) 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 obliged 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 maximize their return on investment.
The draft bill is open for public comment until Oct. 12. According to the posting on the Uzbekistan government website, 9 comments and suggestions have been posted so far, with viewers able to vote on their preferred answers.
Salvar Rasulev, a commenter introducing himself as 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, he says, as it brings foreign currency into the nation.
“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.”
Another respondent, Srapionov Vladimir Ashotovich, takes the alternate view, saying 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.”
However, by and large, most comments suggest the government should stimulate the crypto industry in the country and take a differentiated approach to the electricity pricing depending on which power sources miners use.
Uzbekistan is self-sufficient in power, having major oil and natural gas reserves. 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.
Electricity pylon image via Shutterstock