The Death of Crypto Mining Industry in Asia

    The cryptocurrency mining craze seems to have come to an end as crypto miners are closing up farms across Asia.

    From 2020 to mid-2022, the crypto craze attracted millions of investors across Asia. From Kazakhstan to Jakarta, cryptocurrencies are becoming a potential source of money for many people.

    However, after Bitcoin hit an all-time high of $68,789 in November 2021, the global obsession with cryptocurrencies has slowly worsened. In May, the collapse of LUNA created a chain reaction, destabilizing exchanges and causing users to lose confidence in the crypto field. Towards the end of 2022, FTX exchange declaring bankruptcy seemed to be the peak of frustration.

    The Period of Decline

    By the end of 2021, cryptocurrency miners have dominated the remote areas of Kazakhstan. “Hamsters” is what the small miners are called when they use their own backyard electricity to mine cryptocurrencies. Meanwhile, large mining camps often own areas equipped with powerful CPUs and operate in cold conditions.

    However, miners in Kazakhstan were soon hit hard by the aging power grid and plunging cryptocurrency prices. In January, the Kazakh government cut off power to miners because of widespread energy shortages. After that, the country was forced to use expensive electricity from Russia instead.

    “Almost every legal miner has curtailed their operations,” Din-mukhammed Matkenov, the founder of large-scale miner BTC KZ, told Rest of World. “Russia doesn’t provide stable supplies of power all the time.”

    By February, BTC company KZ was considering moving equipment to Russia or Latin America. However, this plan did not come to fruition. Instead, components are disassembled to move or sold off to reduce operations.

    In addition, Marat, an amateur miner, has also stopped mining cryptocurrency to focus on real estate speculation. Sharing with Rest of World, Marat said he is waiting for the price of Ethereum to reach $ 1,900 to continue mining.

    “If not, we will sell our graphics-processing units to gamers,” said Marat, who requested anonymity as he was illegally tapping into a power source. “It’s not worth it at current prices.”

    Currently, crypto miners in Kazakhstan are under great pressure as the government squeezes the sector with high taxes. Accordingly, the cryptocurrency mining sector is subject to Value-Added Tax, Corporate Income Tax and Electricity Consumption Tax (expected to increase 10 times from January 2023).

    Even in the new law passed by the lower house in Kazakhstan, companies need to pay more for licenses and buy electricity at centralized auctions. 

    “The Kazakh president encouraged investors to come to Kazakhstan,” said Matkenov, regretfully, “and it has all turned out to be good on paper. But the reality is different.” 

    Crypto is “Out of Heat” in Southeast Asia

    The same thing seems to happen in Indonesia. A year ago, people in Indonesia could easily join the crypto wave with just a smartphone. From 2020-2021, the value of crypto trading activity in Indonesia increased more than 10 times, to about $50 billion.

    In November 2021, indie musician Ananda Badudu told Rest of World that he is an NFT mining enthusiast. By December 2022, Badudu’s idealism had collapsed as his investments quickly evaporated following a flurry of bad news in the cryptocurrency market.

    “At this point, I don’t know if it was all just a scam or a legit investment,” Badudu told Rest of World, confused. He still has money in the Binance exchange but doesn’t monitor it at all out of disillusionment. He declined to reveal how much he had lost.

    The series of crypto groups that used to operate on Telegram in Indonesia are now no longer valid. Antonny Teo, founder of the Kriptonesian channel, one of the largest cryptocurrency communities in Indonesia, shared that he has lost about 50% of followers since reaching a record number of members. Currently, the Kriptonesian group has only about 7,000 members.

    Meanwhile, Agus Artemiss, founder of the Cryptoiz group of more than 13,500 people on Telegram, said that “crypto winter” has turned the field into a survival game. Artemiss said that reliable coins will likely survive, while “shit” coins will disappear forever.

    In August, Indonesia’s investment regulator Bappebti counted around 16 million crypto investors. The Indonesian Ministry of Commerce said that this number had continued to increase, but the total transaction value had decreased by more than 50%.

    Investor Confidence is Shaky

    In 2021, when China banned all cryptocurrency activities, many expected Singapore to become the new paradise for investors and exchanges.

    However, the reluctance of the Monetary Authority of Singapore (MAS) to issue licenses has made it difficult for exchanges. Out of hundreds of applications, since the licensing act took effect in January 2020, only 10 have been approved.

    Meanwhile, for Singaporeans, the collapse of FTX has very serious consequences. In the fall of 2021 and 2022 winter, the Singapore government invested a whopping $275 million in the FTX exchange through the state investment fund Temasek, according to Rest of World.

    In fact, Singaporean investors favored FTX because it was a government-licensed exchange. In contrast, MAS has banned Binance since the end of 2021 due to the exchange’s failure to meet regulations on money laundering and transparency.

    “[The government] kind of forced us to use FTX if we wanted to use a big-boy exchange,” Ferris Frederick Francis, co-founder of Singaporean NFT project Cryptobengz, told Rest of World. He said his trust had been amplified by Temasek’s confidence. “If you see your government investing so much money into a business, [you believe] it must be ok.”

    Sean, a Singapore investor who requested a pseudonym due to ties with Temasek, said he has lost more than 50% of his net worth since the collapse of FTX in early November, he only discovered this during his vacation with family.

    “I lost the most out of all my friends,” he said. “I was very disappointed. It made me question my own judgment of character.” 

    (Reference: Rest of World and Zingnews)

    Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision.

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