By Ahmed Hagagy
KUWAIT (Reuters) -Kuwait has launched a crackdown on cryptocurrency miners it accuses of being a “major” cause of a power crisis that has led to blackouts, as authorities seek to ease pressure on the grid before the start of a sweltering summer.
Authorities started a “wide-ranging” security operation last week, the interior ministry said in a statement, targeting homes used for cryptocurrency mining, an activity it said was illegal.
Crypto mining activities “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 has banned cryptocurrency trading but has no laws specifically addressing mining.
OPEC member Kuwait is grappling with a severe power crisis driven by population growth, urban expansion, rising temperatures and delayed maintenance at some plants.
Electricity in the country is extremely cheap and the government has urged residents not to waste it as the need to keep cool amid sweltering summer temperatures heaps pressure on a strained electrical grid.
Cryptocurrency mining, although a major cause of the power crisis, is not the only factor, a source at the electricity ministry told Reuters.
Mining for crypto uses vast amounts of computing power and has prompted authorities from Kosovo to Russia to curb its use to prevent electricity shortages. The miners tend to base themselves where power is cheap, and often in colder climes where it is easier to cool their servers.
Researchers at the University of Cambridge estimated that in 2022, Kuwait was responsible for just 0.05% of the world’s bitcoin mining at the time.
While there is no good data on how much power crypto miners use in Kuwait, “it only takes a very small share of the total bitcoin mining network to have significant impact on the relatively small total electricity consumption of Kuwait,” said Alex de Vries-Gao, founder of Digiconomist, a research project tracking crypto’s energy use.
Kuwait’s crackdown has targeted homes in Al-Wafrah, Kuwait’s southernmost area, where the electricity ministry has previously said around 100 homes were used for mining, some of them consuming up to 20 times normal electricity levels. Energy consumption in Al-Wafrah fell by 55% following last week’s operation, the electricity ministry said in a statement on Saturday.
“They saw government subsidies, saw the absence of oversight, and saw no laws in place, so they exploited the situation to their benefit,” said Saud Al-Zaid, who formerly served as executive board member of the Communications and Information Technology Regulatory Authority in Kuwait.
Kuwait’s central bank has warned against investing in crypto. The country’s approach to the sector differs to that of some of its neighbours which have embraced the industry.
Dubai this week is playing host to a large crypto event, with Eric Trump, U.S. President Donald Trump’s son, among those in attendance.
(Reporting by Ahmed Hagagy; Additional reporting by Elizabeth Howcroft; Writing by Yousef Saba; Editing by Tommy Reggiori Wilkes and Freya Whitworth)
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