Kazakhstan Doubles Down: State-Backed Crypto Mining & Seized Assets Fuel Bold New Digital Reserve

Kazakhstan's playing chess while others play checkers—turning confiscated crypto and government-run mining ops into a sovereign digital vault.

State-sponsored hashpower meets seized Satoshis

The Central Asian nation's stacking sats the unconventional way: repurposing illegal mining rigs (confiscated in last year's crackdown) and funneling seized darkweb bitcoin into national coffers. No taxpayer funds required—just repurposed crypto infrastructure and assets nobody could legally claim.

Mining as monetary policy

With 6% of global Bitcoin hashpower already within its borders, Kazakhstan's betting that controlling the pickaxes beats buying the coins. Their state mining farms—powered by stranded energy even oil companies ignored—now double as a monetary printing press that can't be sanctioned.

Wall Street analysts are already calling it "the most cynical (and genius) treasury strategy since the US abandoned the gold standard."

However, the specific mechanisms for building the state crypto-reserve will be developed in collaboration with law enforcement and concerned state bodies, positioning Kazakhstan as the first Central Asian nation to create such a sovereign digital asset reserve.

From Mining Haven to Regulated Digital Asset Hub

Kazakhstan’s journey began in 2021 when Chinese mining operations fled regulatory crackdowns, propelling the country to control over 27% of global bitcoin mining.

Cheap electricity and minimal regulations initially attracted miners, but this rapid influx strained the national power grid and exposed critical gaps in legal oversight.

By 2023, new regulations dramatically scaled back mining activities to 4% of the global share.

Authorities have since registered 415,000 mining machines, issued 84 licenses with 64 currently active, and accredited five mining pools under the comprehensive licensing system.

Law enforcement agencies demonstrated robust capabilities, shutting down 36 unauthorized platforms worth $118 million in 2024 alone and blocking over 3,500 unlicensed crypto websites.

Kazakhstan regulator quoted that several illegal exchanges have recently played a key role in money laundering schemes.#KazakhstanCrypto #CryptoExchanges https://t.co/hN5CHiRbSp

Advanced mining operations now operate under the innovative “70/30 project,” where foreign investors fund the modernization of thermal power stations, with 70% of the capacity allocated to the national grid.

The remaining 30% gets reserved for miners, addressing previous grid strain issues while generating state-backed digital assets for the proposed reserve.

Notably, legal trading remains concentrated within the Astana International Financial Centre, which operates under its own regulatory framework and has attracted major exchanges like Binance and Bybit.

@binance_kz and @Bybit_Official are on the brink of becoming the country's first regulated Digital Asset Trading Facilities (DATFs) in Kazakhstan after receiving full authorization from the Astana Financial Services Authority!#Binance #Bybit…https://t.co/hAo1DizcAP

Meanwhile, non-compliant platforms, such as Coinbase and Kraken, still face restrictions.

Deputy Governor Berik Sholpankulov has also confirmed that legislative amendments include launching digital financial assets with legal status determination and introducing regulation of unsecured cryptocurrency circulation through licensing.

Strategic Positioning Amid Regional Competition

Kazakhstan’s measured regulatory approach contrasts sharply with that of its neighboring Uzbekistan, which has rapidly adopted cryptocurrencies.

This has particularly created distinct competitive dynamics in Central Asia’s emerging digital economy.

Uzbekistan currently holds the 54th place in the global crypto adoption index, to rank 33rd in 2024, while Kazakhstan advanced more modestly to the 57th position.

Strategically, Kazakhstan prioritizes institutional control and regulatory structure, while Uzbekistan favors broader retail adoption.

Moreover, Kazakhstan’s digital ambitions extend beyond mining and reserves.

The country recently launched the solana Economic Zone Kazakhstan in partnership with the Solana Foundation, creating Central Asia’s first Web3-focused economic zone.

Kazakhstan and @SolanaFndn announce the Solana Economic Zone, advancing digitization and capturing institutional interest. #Solana #Kazakhstan https://t.co/YC9ubY89L9

President Kassym-Jomart Tokayev also unveiled plans for “CryptoCity”, a pilot zone where cryptocurrencies can be used for everyday payments, signaling the government’s commitment to real-world crypto adoption.

The proposed crypto banking system will provide integrated services including digital asset exchange, storage, and transaction processing within regulated parameters.

Prime Minister Bektenov also noted that banks WOULD contribute to anti-money laundering efforts while supporting compliance with terrorism financing regulations.

However, despite enforcement efforts, experts estimated that 91.5% of crypto-related activity in 2023 occurred outside regulatory oversight, resulting in a total transaction volume of approximately $4.1 billion.

The central bank digital currency development will also continue with the digital tenge launch expected this year.