18.01.2021

Kyrgyzstan Cuts Off Power to 45 Crypto Miners for Overconsumption

Following the power cut, the head of the National Energy Holding Aitmamat Nazarov stated that the cryptocurrency mining is not defined under Kyrgyzstan law, local news agency AKIpress reported on Sept. 20.

Authorities of Kyrgyzstan cut off power to 45 crypto mining firms as they consumed more energy than three local regions combined.

136 MW of electricity used

Nazarov elaborated that electricity consumption by local crypto mining firms does not fall within Kyrgyzstan’s energy distribution plan. The executive clarified that the 45 crypto miners consumed 136 megawatts of electricity, which is more than the amount consumed by three Kyrgyzstan regions, namely Issyk-Kul, Talas and Naryn.

Cheap energy pricing

As noted in the report, Kyrgyzstan has become a popular site for global cryptocurrency mining firms due to its cheap energy pricing. In late August 2019, the Ministry of Economy of Kyrgyzstan submitted a draft law in order to introduce cryptocurrency mining taxation, aiming to increase budget revenues.

Cryptocurrencies were banned in Kyrgyzstan in July 2014 after the National Bank of the Kyrgyz Republic released a warning against Bitcoin (BTC) and other cryptocurrencies being used as a payment method, which is illegal under national law.

Meanwhile, Iran, which was similarly cutting off electricity to local mining farms, proposed to register crypto miners on an annual basis in a move to regulate the industry, as reported on Sept. 19.

Litecoin’s Mining Power Has Fallen 28% Since Its Halving

Many litecoin (LTC) miners working to secure the blockchain and compete for block rewards have been unplugging their machinery following the cryptocurrency’s recent “halving” event, network data shows.

Litecoin’s mining difficulty – a coded-in measure of how hard it is to solve the mathematical puzzles used to write blocks on the network – has dropped from 15.93 million on Aug. 4, one day before the halving, to 11.40 million on Aug. 22, based on data from mining pool BTC.com. The hashing power on the network has also fallen by 28 percent.

Litecoin’s mining difficulty is designed to automatically adjust every 2,016 blocks, approximately every 4 days, to ensure the block-producing interval remains about 2.5 minutes based on the average hashing power in the current cycle.

The 28 percent difficulty drop means the current level is the lowest since April 29. BTC.com’s data estimates that difficulty will continue to decline by another four percent at the next adjustment date, which is due in three days.

The 4-day average hashing power on the litecoin network has also declined from 456 terahash per second (TH/s) recorded on Aug. 4 to 326 TH/s on Aug. 22 at 23:54 UTC, when the latest difficulty adjustment occurred – a 28 percent drop.

Chart via BTC.com

Data for the three-day hash rate distribution indicates that currently miners connected to the mining pool Poolin account for 23 percent of the network’s total computing power, followed by those connected to f2pool and Bitmain’s Antpool.

The decline of mining interest is perhaps not surprising as the halving event on Aug. 5 reduced litecoin’s block rewards from 25 LTC to 12.5 LTC, leaving existing mining equipment with a significantly decreased profitability.

F2pool’s data shows the most profitable miners on the litecoin network, made by InnoSilicon and FusionSilicon, now have a profitability of between 10 to 20 percent, as LTC’s price has dropped from $93 before the halving to around $74 at press time.

Assuming the electricity needed to power the miners costs $0.04 per kWh, these models are estimated to bring home a daily profit between $0.20 and $0.50. At the current price of LTC, older mining equipment like Bitmain’s AntMiner L3 and L3+ would be making negligible profit at just over $0.01 a day, f2pool’s index shows.

Litecoin is the fifth largest cryptocurrency by market cap currently.

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