Kazakhstan has just signed a deal to build a $1.9 billion data center complex, betting that its geographic location and energy resources will allow it to become a dominant player in the global computing race. There’s one problem. The country currently doesn’t have enough electricity to power what it already has.
The agreement, signed between Kazakhstan’s Ministry of Artificial Intelligence and Digital Development and an international consortium, is central to the government’s plans to transform the Central Asian country into a data center hub. However, the project schedule is clearly tied to Kazakhstan’s ability to resolve existing power shortages.
Global computing land acquisition
Big tech companies are expected to invest nearly $400 billion in cloud infrastructure by 2025. SoftBank and OpenAI’s Stargate project alone could pump up to $500 billion into AI data center expansion around the world. Nvidia CEO Jensen Huang has been vocal about the lack of global AI computing power, effectively telling every country with a power grid that they have the money.
Kazakhstan has long been one of the world’s leading destinations for Bitcoin mining, with operators drawn to cheap electricity and relatively lax oversight. At its peak, the country ranked among the top three in the world for Bitcoin hashrate. This unofficial cryptocurrency mining boom has put a huge strain on the country’s power grid, and Kazakhstan has imposed restrictions and taxes on mining operations starting in 2022.
From cryptocurrency mining to formal computing
CoreWeave started as a cryptocurrency mining operation and now generates $1.9 billion in revenue by leasing Nvidia GPUs to AI companies. From mining Ethereum, it has become one of the most popular cloud computing providers in the world.
Rather than hosting thousands of small, informal mining operations that strain the electricity grid and generate minimal tax revenue, the government wants to attract formal large-scale data center operators who pay a fair fee and contribute to the broader economy.
What this means for crypto and computing investors
Kazakhstan’s push for normalization is part of a global pattern. Governments that once tolerated or ignored crypto mining are now heavily taxing or banning crypto mining, and are directing the same energy toward AI infrastructure. For Bitcoin miners in particular, this means the list of friendly jurisdictions continues to shrink, pushing their hashrate to countries with clearer regulatory frameworks, such as the United States and parts of Latin America.
Kazakhstan’s $1.9 billion project is worthless if the country can’t generate enough electricity to run it. The government recognized this and decided to make the project schedule conditional on eliminating the deficit.
For investors in decentralized computing protocols like Akash, Render, and io.net, the centralization of AI computing in government-backed megaprojects is both a threat and a validation. The threat is clear. Governments and hyperscalers have deeper pockets. Studies show that computing shortages are real enough for countries to gamble billions of dollars on, making the very market conditions that make decentralized alternatives attractive to smaller buyers who cannot compete for capacity in government-backed facilities.
