Kuwait, once considered one of the cheapest nations for Bitcoin mining, has taken action against the practice, citing the growing electricity demands amid a worsening energy crisis.
Regulatory pressure is once again being faced by crypto miners due to their energy consumption. On Thursday, May 1, a crackdown was initiated by Kuwait on crypto mining sites, with accusations that they are placing significant strain on the nation’s electric grid.
A widespread operation targeting homes involved in crypto mining was initiated by the country’s interior ministry. Local media reported that the sweep led to investigations of more than 60 individuals suspected of participating in crypto mining.
Crypto mining operations “constitute an unlawful exploitation of electrical power … and may cause outages affecting residential, commercial and service areas, posing a direct threat to public safety,” the ministry said.
Kuwait Grapples with Surge in Energy Demand
The move was made as recurring blackouts are faced by the nation, caused by rapid population growth and increasing temperatures. In May, temperatures range from 32°C (90°F) to 39°C (102°F), putting considerable strain on the electric grid. The widespread use of air conditioning is a major contributor to the overall electricity demand.
At the same time, Kuwait is ranked among the top 20 countries globally with the lowest electricity costs. According to a report, electricity in Kuwait is priced at just 2.9 cents per kilowatt-hour, significantly lower than in most industrialized nations.
Due to electricity being one of the most crucial inputs in proof of work mining, locations like Kuwait have seen miners operating more competitively than in many other countries. As a result, it has become an attractive destination for crypto miners, emerging as one of the most affordable places to mine cryptocurrencies.
While crypto mining was not the sole contributor to high energy consumption, Kuwait was not the only country to impose a ban on the activity. Previously, Russia and China, both nations with affordable energy, also prohibited mining. Russia attributed its ban to the strain on the electric grid, while China enforced the ban as part of its commitment to transitioning to green energy.
