The Cryptocurrency Mining Industry in Uzbekistan is at risk, due to a bill introduced by the Uzbek government to hike power charges for cryptocurrency miners.
The new bill proposed by the Ministry of Energy of Uzbekistan has proposed, a very steep increase in the power rates charged to the miners. Cryptocurrency Miners hold devices with powerful computing power, which they use to record and secure transactions on the blockchain in return of which they get rewarded with the cryptocurrency. Crypto mining is very energy expensive thing, requiring a lot of energy to be able to work at full potential. The bill states:
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.
The government and the ministry of energy have argued that the bill effectively saves the country a lot of power, and will also be beneficial for the general public. The bill proposes the new price to be roughly three times the current price, and only cryptocurrency miners are mentioned in the bill, other industries won’t be charged more no matter their usage. In Uzbekistan, the price of electricity for a general user is 3.5 cents per kWh. This makes bitcoin and other crypto mining operations very profitable as the primary expense of bitcoin mining is electricity.
Open for Comment:
The bill has not been finalized by the Uzbekistani government and is open for all public comments until 12th October. The bill has been posted online, with viewers able to vote and comment on the bill’s proposal. So far there have been only nine comments on the bill, a commentator who described himself as an IT entrepreneur made a very strong case against the hike. He explained how the crypto mining industry is bringing a lot of foreign currency into the country. He wrote:
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.
Most of the comments suggested that the government instead of trying to put the industry down should be supporting it as the industry is raking in huge amount of financial capital.
Cost of mining Bitcoin:
A U.S. based electricity company has calculated the cost of mining bitcoin all around the world. They used standard rigs made up of Antman S9s as the standard metric. According to their calculations, South Korea is one of the most expensive countries to mine bitcoin, with the cost being upwards of 26,000$ for a single mined bitcoin.
Uzbekistan is one of the cheapest countries to mine a bitcoin, where mining a single bitcoin costs around $1,700. The pricing makes Uzbekistan one of the only countries in the world where bitcoin mining was still profitable in early 2019 even after the downfall of bitcoin in 2018.