Kuwait has taken extremist action to defend the stableness of its energy network. The authorities introduced a complete ban on cryptocurrency, indicating the hazard of strategy overload and possible power outages.
Prohibition of cryptocurrency as a consequence to the energy crisis
Kuwait, 1 of the richest Gulf states, has taken an unprecedented step: The Interior Ministry has declared a full ban on cryptocurrency. This decision was justified by the concern that stability of the national energy systemwhich has late faced serious challenges.
The process of digging cryptocurrency, especially specified as Bitcoin, requires advanced computing power and generates crucial energy consumption. In the context of Kuwait, where summer temperatures exceed 50°C, and the energy request due to the intensive usage of air conditioning is huge, the additional network burden poses a real threat.
The magnitude of the phenomenon: 100 properties, 20 times the power consumption
According to the Communication from the Home Ministry, the ban is part of a broad prevention operation. Within its framework hundreds of industrial houses and facilities were checked, focusing on locations with unusually advanced energy consumption. Result? Detected approximately 100 propertiesIn which illegal cryptocurrency operations were conducted.
In utmost cases energy consumption was 20 times higher than in the average Kuwaiti household. The situation was peculiarly serious in confederate regions of the country. After closing the detected cryptocurrency mines, energy consumption down by 55%, which clearly indicates the impact of this on local networks.
Legal gap and low energy prices as a magnet for ‘miners’
So far, Kuwait has been banned from trading cryptocurrency, but there are no rules on their extraction. This legal state was utilized by miners who used inexpensive electricity and deficiency of supervision to organize energy-intensive operations there.
This phenomenon falls within the wider trend observed in low-energy countries – as Iran, Kazakhstan or Venezuela – which besides struggled with network overload and introduced akin restrictions.
Impact on energy safety and everyday life
The Kuwaiti authorities point out that air conditioning is not luxury, it is necessity in the utmost climate of the country. Maintaining the stableness of electricity supply is essential to defend the wellness and life of the inhabitants. Ministry warns that an overloaded network could lead to extended blackouts that have late experienced Spain and Portugal – but there were storms and weather anomalies.
Cryptovalut vs. energy infrastructure
Experts stress that the problem of cryptocurrency extraction and its impact on energy networks will increase. An algorithm-based digging process Proof of Work (POW), used, among others, by Bitcoin, uses immense amounts of energy. This is due to the request to solve complex mathematical problems that require specialized computers and additional cooling.
According to analyses, only a fewer large mines can importantly affect local power consumption, leading to energy shortages, increased costs for consumers and disruption of critical infrastructure.
What's next? Investments in energy and further constraints
Kuwait present faces the request to modernise the full energy system. Plans include construction of fresh power plants, modernization of transmission networks and investments in expanding the efficiency of existing installations. By then, the country will most likely proceed its policy restrictive supervision and restrictionsto guarantee energy security.
In parallel, Kuwait, like another Gulf states, explores possibilities diversification of energy sources, including improvement Renewable energy, which can reduce the force on conventional energy sources in the long term.
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Kuwait bans cryptocurrency. Reason? Energy crisis on the horizon
