Part One: The Pledge to Construct Data Centres
On December 14, 2018, at a meeting of the Security Council focusing on digital development measures, Sooronbai Jeenbekov, the President of the Kyrgyz Republic, declared, «Regional data centers must be established across the country.»
Fast forward to June 25, 2019, Dastan Dogoev, Head of the State Committee for Information Technologies, during a press conference in Bishkek, stated, «Presently, we are in the process of selecting a location for constructing a data centre as part of the Digital CASA project. The preliminary capacity of the centre is estimated to reach 100 megawatts, which equates to roughly 30% of Bishkek’s energy consumption. This data centre will be a unique platform hosting information resources from both public and private sectors. However, the construction of such a vast DATA centre is proposed within the context of regional digital cooperation. Hence, we anticipate this centre will also offer services to neighbouring countries. With the evolution of technologies such as BIG DATA, artificial intelligence, and blockchain, corresponding resources are needed. We are hopeful that constructing such a centre will facilitate the active development of these technologies in our country.»
Aitmamat Nazarov, Chairman of the Board of the National Energy Holding, during a meeting with representatives of private distribution companies on July 3, 2019, proposed, «We have submitted a proposal to the Government of the Kyrgyz Republic to establish a mining area located near a major substation or hydroelectric power plant. Mining companies will have the right to collaborate directly with the National Energy Holding. We are prepared to dedicate 100–200 MW of electricity for this purpose.»
During the first intermission, investors, inspired by the country’s leadership’s advocacy for digitalization, commit to funding local data centres. As the legislation doesn’t forbid data centres from being utilized for mathematical computations for crypto-asset mining purposes, they are heavily engaged in this activity.
Part Two: The Threat to Penalize Mining and Shut Down Data Centres
On July 17, 2019, the State Service for Combating Economic Crimes (Financial Police) issued a press release stating, «A criminal group has been identified that is engaged in illegal business activities related to digital currency mining, specifically the creation of cryptocurrencies (bitcoins). This operation involves computer systems, advanced telecommunication and communication tools (specifically, blockchain computer equipment). The value of one bitcoin as a means of payment is approximately 10 thousand US dollars.»
It’s important to highlight that the production and circulation of cryptocurrencies can negatively impact state functions such as monetary and financial regulation, budgetary regulation, and ensuring public order and national security (funds may be directed towards questionable organizations or criminal groups).
Consequently, the decentralization of money issuance can undermine the functions of funds as mediums of accumulation and circulation. Lack of control over transactions can lead to a weakening of the national currency, increased electricity consumption without creating additional value within the Kyrgyz Republic, potential social unrest, and a weakening of the state’s internal and external functions.
Moreover, the investigation discovered that the aforementioned LLC is drastically exceeding the standard electricity consumption, utilizing around 6–7 thousand megawatts, with a monthly electricity bill of 13–14 million soms. This usage is comparable to the electricity consumed by several districts of Bishkek city, negatively impacting the power supply to enterprises in the real sector of the economy and the republic’s population (e.g., rolling blackouts, deteriorating distribution networks, etc.).
In a telephone message dated July 17, 2019, signed by A. Israilov, the First Deputy Chairman of the Board of the National Energy Holding, directed at the general directors of energy companies, it was stated, «We inform you of the need to provide the following information by 15:00 on July 18, 2019…data centres; A list of additionally identified facilities for cryptocurrency mining and data centres, and actions to disconnect them from the power supply. The CEOs bear personal responsibility.»
During the second intermission, the audience energetically debates the actions of the security forces. There are suggestions that the unfortunate firm simply didn’t want to pay the «fee.» They question if possessing a data centre is now synonymous with drug possession, and if mathematical calculations, which the authorities struggle to comprehend, equate to «criminal group» activities. Human rights activists jostle in the cafeteria queue.
Part Three: A Deeper Dive into the Issues
On July 23, 2019, Prime Minister Mukhamedkaly Abylgaziev stated, «The government is focused on intensifying efforts to attract investment, and one of the main prerequisites for investors is a stable energy supply… However, mining farms consume considerable amounts of electricity. The issue of legalizing mining requires profound analysis… We need to delve deeper into this issue…».
As the audience exits the opera, they exchange confused glances, admitting to each other that they failed to understand the director’s intentions. With puzzled expressions, they head home.