Kazakhstan Taps Oil Fields' Flared Gas for Crypto Miners

Kazakhstan is taking steps to make its power grid more resilient by partnering crypto miners with oil fields that flare associated gas. The country's government has long struggled to manage the energy demands of its booming crypto mining industry, which consumes large amounts of electricity and puts pressure on the national grid.

In 2021, a major influx of crypto miners flooded Kazakhstan's power system, leading to power shortages and blackouts in some areas. To mitigate this issue, the government introduced measures such as restricting miners' access to electricity and an auction system for surplus energy. However, these efforts pushed many miners into the grey market or out of the country.

The new initiative aims to convert associated gas from oil fields into a stable source of electricity for crypto miners. This would not only reduce pressure on the national grid but also generate revenue for the oil companies by selling the gas at a lower price than commercial-grade gas. The setup involves setting up power plants using excess associated gas, which can then be sold to mining operators.

Batyr Bauyrzhan, Technical Director of WES LLP, noted that this arrangement provides miners with a stable and cheap source of electricity without putting additional pressure on the national grid. 'Crypto mining is a major industry in its own right, characterised by high volatility and a high cost of entry, which is why access to cheap electricity is absolutely critical,' he said.

The Kazakh Ministry of Energy estimates that around 40-60 oil fields flare associated gas, with approximately 300-340 million cubic meters flared in 2024. This could potentially generate an estimated 1.2-1.3TWh of electricity if converted into a usable form.