Kyrgyzstan is introducing a de facto moratorium on new mining farms. The official reason is an acute electricity shortage in the republic: the country is not ready to issue permits for cryptocurrency mining until large hydroelectric power plants are completed and domestic electricity needs are met.

To date, only two mining sites operate legally in the country. The first is located at the Kambarata HPP-2 and consumes 30 MW — capacity that for 15 years could not be delivered to consumers due to outdated grids.

The farm took up capacity that had been idle for a decade and a half

When the Kambarata HPP-2 was commissioned in 2009, a 120 MW unit was installed at the station, but the lines and transformers connecting the facility to the main substation turned out to be too worn and could not carry the full output. Only 90 MW went into the grid. It was precisely this "locked" capacity that a private investor began to use, placing a 30 MW mining farm at the station.

Under the terms of the agreement, the entrepreneur recoups the investment in four to five years, after which he fully transfers the facility to the National Electric Grid of Kyrgyzstan (NESK). Two years have already passed — in two to three years the farm will become state-owned. The investor does not record direct commercial benefit from this format.

In addition to the declared $430 million in assistance, the company of the entrepreneur, who returned to the country after 11 years abroad, together with partners financed the modernization of the grids:

  • installation of two new autotransformers at the Kurpsai HPP, raising throughput from 63 to 125 MVA, for 271.5 million som;
  • reconstruction of the Kambar-Ata substation for 318.8 million som;
  • replacement of 36 km of 110 kV overhead lines for 125.2 million som.

All the work cost 715.5 million som. Now, from April to September, the station will be able to feed all 120 MW into the grid, whereas in the remaining months, due to a lack of water, output will remain at 90 MW.

New farms — only after HPPs are launched

The second operating farm is located in Kemin. It does not draw electricity from the Kyrgyz grid but imports it from Russia and Kazakhstan. In winter, when energy is scarce, the authorities shut down the site and direct the imported capacity to the population.

No more mining permits have been issued in the country. It is acknowledged that the farms bring significant tax revenues, but the republic still lacks its own electricity. New sites will be granted access only after large HPPs are completed and cover domestic demand.

A separate layer of problems is the sector's debts. By 2020, NESK had accumulated 137 billion som in debt, built up over 30 years due to theft in the energy sector. The authorities expect to fully settle it by the end of the current year, and within five years the country will get rid of more than $1.5 billion in debt.

Cryptalist analysis: The Kyrgyz case illustrates a trend common to Central Asia: mining is viewed not as an independent source of income but as a tool for monetizing idle generation and attracting capital into infrastructure. The strict linkage of new permits to the commissioning of HPPs limits the inflow of hashrate into the region in the short term but reduces regulatory and reputational risks for the industry. For the market, this is a signal of mining shifting to jurisdictions with an energy surplus and transparent connection rules.