The Kyrgyz Republic, a central Asian state bordering China, is reportedly growing its cryptocurrency mining powers with support of the local government.

Kyrgyz President Sadyr Japarov has given a nod to building a crypto mining farm at a hydroelectric power plant, Kyrgyzstan’s national news agency Kabar reported on July 27.

The government of Kyrgyzstan plans to spend up to $20 million to build a cryptocurrency mining facility at the Kambar-Ata-2 Hydro Power Plant.

According to the president, running a crypto mining farm will allow the government to avoid energy losses associated with non-used power from the power plant, the report said.

Since launching Kambar-Ata-2 in 2010, Kyrgyzstan has lost 6.8 billion kilowatt-hours (kWh) of energy due to this issue, Japarov reportedly said. By establishing the mining farm, the Kyrgyz government will be able to deploy the remaining energy wisely and bring benefits to the country’s budget, the president noted, stating:

“As soon as the mining farm starts working, the earned money will go to the power engineers or, to be more precise, to the ordinary people. Each tyiyn, every kWh will be under the control of power engineers. Everything will be automated and under our control.”

The report somewhat contradicts recent energy-related news in Kyrgyzstan. On July 24, the Kyrgyz president announced a state of emergency in the energy sector of Kyrgyzstan, which is scheduled to start on Aug. 1, 2023, and expected to end on Dec. 31, 2026. According to official data, the emergency situation is caused by climate challenges, a low inflow of water into the Naryn River basin and the lack of generating capacity due to excessive growth of energy consumption.

In the latest report by Kabar, Japarov stressed that crypto mining will be tariffed at the highest rate available in Kyrgyzstan, though, or around 5 Kyrgyzstani soms ($0.057) per kW.

The press office of the Kyrgyz government didn’t immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

Government authorities in Kyrgyzstan have been increasingly looking at cryptocurrency as an opportunity to boost the local economy.

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In March 2022, Kyrgyz lawmaker Karim Khanjeza called on the authorities in Kyrgyzstan to legalize the cryptocurrency industry during a parliamentary committee meeting. The official urged the government to develop a legal framework for crypto, arguing that “nothing is growing as fast as cryptocurrency.”

Despite introducing some regulations for crypto exchanges in 2021, the government of Kyrgyzstan has not passed any crypto-related laws so far. A few years ago, a former government official also argued that cryptocurrency mining was a major factor driving the energy crisis in Kyrgyzstan.

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