Illegal Bitcoin Mining on the Rise in Tajikistan and Kazakhstan

Illegal cryptocurrency mining caused $3.52 million in damages in Tajikistan in H1, according to the country’s Attorney General Khabibullo Vokhidzoda.

Speaking at a press conference, Vokhidzoda reported that these damages relate specifically to the illegal use of electricity by miners, with energy providers compensated by the state.

“There are people who import equipment for mining companies into the country from abroad and illegally mine cryptocurrency,” said Vokhidzoda, who added that four to five criminal cases involving the use of mining equipment are currently open.

Vokhidzoda’s remarks follow a similar update from the prosecutor’s office in the Sughd region, which is pursuing seven cases where 135 mining devices were discovered inside residential buildings, causing just over $30,000 in damages.

While cryptocurrency mining is neither legal nor illegal in Tajikistan, it has been happening within a wider context of illegal and unpaid electricity use in the Central Asian country.

190 criminal cases related to such use have been opened since January, implicating 3,988 individuals and running up a bill for damages of $4.26 million (so far).

Central Asia’s illegal crypto mining problem

Tajikistan is not the only nation within Central Asia to face a mounting cryptocurrency mining problem, with authorities in Kazakhstan recently cracking down on a scheme to mine crypto using illegally sourced energy.

Working together, Kazakhstan’s Financial Monitoring Agency and National Security Committee discovered that employees of local energy companies had, over the course of two years, provided mining enterprises with more than 50 megawatt-hours (MWh) of electricity meant for domestic and commercial use.

This was equivalent to the energy consumption of a city of between 50,000 and 70,000 inhabitants.

Kazakh authorities also reported that the stolen electricity was worth approximately $16.5 million, and that the scheme’s organiser used its proceeds to purchase two apartments and four cars, which have now become subject to a confiscation order.

As with Tajikistan, cryptocurrency mining is not strictly illegal in Kazakhstan, but authorities have been trying to limit its impact on the nation’s energy grid.

A recent law stipulates that mining farms are permitted to buy electricity only from the Ministry of Energy, and that they cannot buy more than 1 MWh or less.

Such regulations have been aimed at limiting a sector which gained a massive boost after China banned cryptocurrency mining in 2021, with Central Asia’s combination of cheap costs and inconsistent enforcement making it a magnet for miners.

“We previously saw mining activities getting a boost in Kazakhstan after China kicked miners out in 2021,” Digiconomist founder Alex de Vries told Decrypt. Given the country’s proximity to China, and “beneficial circumstances” including the rising price of Bitcoin, “these might be attractive areas for Chinese miners to head to,” he added.

China—and Russia?

It’s not only Chinese miners who may be growing Central Asia’s mining sector, but also their Russian counterparts.

That’s the view of Ari Redbord, Global Head of Policy and Government Affairs at TRM Labs, who told Decrypt that sanctioned Russian actors have leveraged parts of the Central Asian crypto ecosystem in recent years, particularly in Kyrgyzstan.

“Given the region’s highly interconnected financial and crypto infrastructure, illicit mining activity in Kazakhstan or Tajikistan could tap into the same cross-border networks, counterparties, and liquidation pathways already used for sanctions evasion,” he said.

China’s example could be an instructive one for nations such as Kazakhstan and Tajikistan, since Alex de Vries notes that China continued to have a strong footprint in Bitcoin mining even after its blanket ban.

“Their share went from almost 50% to 20% according to the Cambridge mining map,” he explained. And while bans have a “strong impact,” he added, even with comprehensive mining bans it’s “difficult to completely eliminate it.”

As the recent cases in Tajikistan and Kazakhstan suggest, smaller scale operations can continue to operate under the radar, especially where oversight and enforcement is weak.

“Central Asia offers a combination of relatively low-cost energy, limited regulatory oversight, and, in some cases, unclear legal frameworks for mining,” said Redbord. “Those conditions create opportunities for illicit operators to run unlicensed mining operations at scale, often beyond the reach of formal compliance and monitoring regimes.”