Social and environmental implications of crypto mining

The role of imaginaries and expectations in the development of crypto

mining in the case of Kazakhstan and Sweden.

Keywords: imaginaries, expectations, crypto mining, Kazakhstan, Sweden

Dana Abdykayeva

Student ID: i6294227

Email: d.abdykayeva@student.maastrchtuniversity.nl

Supervisor: Odinn Melsted

Master Thesis (2122-EST4800)

MA European Studies on Society, Science, and Technology

Specialization: Science and Public Policy

Date: 30/06/2022

Word count: 18199

 ABSTRACT
The paper examines the social and environmental implications of crypto mining in Kazakhstan
and Sweden by using expectation and sociotechnical imaginaries frameworks. The conflicts
between different power groups in the crypto industry are analyzed to find out how expectations
from crypto mining are formed and contested in both countries. The thesis used official
statements presented by governmental authorities, news articles, and social media entries to
understand how crypto mining is framed to find how imaginaries about crypto industry are
created in Sweden and Kazakhstan. Furthermore, the paper scrutinizes the interrelationships
between expectations and imaginaries. The main finding of the research is that while imaginaries
and expectations determine the future for crypto mining, the opposite is also true as societal and
environmental aspects of crypto mining affect how imaginaries and expectations are formed.

ACKNOWLEDGEMENT
I can not find better words to express my gratitude to the fantastic teaching staff of the
ESST program for granting me such a fabulous experience and deep knowledge in the field of
science, society, and technology. I want to show my deepest appreciation to my thesis
supervisor, Odinn Melsted. I am extremely indebted to him for all the support and feedback, that
made it possible for me to go through the path of completing this thesis. I am also very thankful
to the coordinator of the ESST program, Dr. Geert Somsen for the guidance provided throughout
the year. Next, I am grateful to John Harbord for his help in improving my academic writing
skills. Besides, I want to express my gratitude to my study-buddies that stayed with me during
this challenging journey of writing the thesis. Finally, I want to give many thanks to my family
for their belief in me, which was my greatest motivation during whole ESST program.

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TABLE OF CONTENTS

ABSTRACT..................................................................................................................................... 2

ACKNOWLEDGEMENT ............................................................................................................... 2

1. INTRODUCTION ....................................................................................................................... 5

1.1 Background ............................................................................................................................ 5

Case 1: Kazakhstan ................................................................................................................... 6

Case 2: Sweden ........................................................................................................................ 6

1.2 Literature review.................................................................................................................... 8

1.3 Framework and Methodology ............................................................................................... 9

2. CRYPTO MINERS VS GOVERNMETS ................................................................................. 11

2.1 Kazakhstan ........................................................................................................................... 11

2.1.1 Regulations.................................................................................................................... 11

2.1.2 Investment tool ............................................................................................................. 14

2.1.3 Tax ................................................................................................................................. 16

2.1.4 “Grey” miners vs “white” miners .................................................................................. 17

2.2 Sweden ................................................................................................................................. 21

2.2.1 Regulations.................................................................................................................... 23

2.2.2 Illegal miners ................................................................................................................. 25

2.2.3 Public perceptions......................................................................................................... 28

2.3 Comparison .......................................................................................................................... 30

3. ENVIRONMENTAL IMPACT ................................................................................................. 32

3.1 Kazakhstan ........................................................................................................................... 33

2.7 Resources management issues and political factors ....................................................... 35

2.8 Future perspectives ......................................................................................................... 37

3.2 Sweden................................................................................................................................. 39

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 3.2.1 Ban on crypto mining: debates ..................................................................................... 39

3.3 Comparison .......................................................................................................................... 42

4. DISCUSSION ............................................................................................................................ 43

5. CONCLUSION .......................................................................................................................... 46

6. FUTURE STEPS ....................................................................................................................... 48

REFERENCES .............................................................................................................................. 49

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 1. INTRODUCTION
1.1 Background
New technologies often bring significant changes to many aspects of our lives. The
emergence of cryptocurrencies as a means of payment has attracted a lot of attention to them in
recent years. They use a blockchain technology to enable secure transactions without
intermediaries such as banks and other financial institutions (Greenberg & Bugden, 2019,
p. 162). In order to produce and exchange Bitcoin, currently the most popular cryptocurrency,
complex algorithms need to be run on computer servers to form the blockchain ledger. That
process is called “mining” and requires vast amounts of energy. There are different types of
mining that like Proof-of-Work (PoW). Proof-of-Stake (PoS), as well as hybrid. Proof-of-Work
(PoW) is a piece of data which can be easily verified, but extremely difficult to create. Its
production requires a lot of energy and time. PoS, in contrast to PoW does not have rewards for
participants in the form of new coin, instead they are paid the transaction fee. The PoS network
doesn’t involve mining and thus does not require vast amount of energy. PoW is more widely
adopted and tested, and more secure, compared to PoS (Bruno, 2019). PoW requires large
amounts of energy and creates economies of scale, which means it is not feasible in the long run.
While PoS can be suitable for longer periods, it has a logistical problem of initial coins
distribution. A hybrid system is energy efficient in the long run and does not have issues with
initial coins distribution. Hybrid mechanism tends to get increasing popularity in cryptocurrency
community. Some alternative methods like Ripple and Stellar have been proposed as well.
However, as price of coin reflects its acceptance by the public and network size, it can be hard
for another cryptocurrency to outperform Bitcoin in the number of users and trading volume,
even though it is less optimal (Farell, 2015).

Crypto mining is generally an energy-intensive process, so there are many debates today
on whether such activities should be restricted to increase the efficiency of energy consumption.
Such debates play an important role in society as they determine the further development of
crypto industry. Because crypto mining can have a significant impact on society and
environment, and debates about it have a highly controversial nature, it is important to study
crypto mining from a Science, Technology, and Society (STS) perspective. Using STS
frameworks, like expectations and imaginaries (explained later in this paper) to analyze the

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development of crypto industry enables multidisciplinary view to the controversies around
crypto mining, as well as social and environmental implications of the crypto mining. To look
closer at the topic, this research paper analyses two cases studies that present two contrasting
economies.

Case 1: Kazakhstan

Kazakhstan became a popular location for crypto miners after China banned crypto
mining activities and, as a result, 60-70 percent of Bitcoin mining network with approximately
87,849 mining machines moved from China to Kazakhstan (Volpicelli, 2022). Kazakhstan has an
abundance of fossil fuels that can be used to generate electricity for crypto mining (De Vries et
al., 2022, pp. 2-3). Nowadays, it lowered to the third place, but still plays a significant role in the
crypto market (Partz, 2022). Whereas crypto mining has a potential to bring some economic
value to Kazakhstan, it also affects the environment. Kazakhstan uses hard coal with the highest
carbon content to generate electricity and higher-emitting plants than neighboring China (De
Vries et al., 2022, p. 2). The International Energy Agency (2020) states that coal constituted
nearly 70% and natural gas - around 20% of electricity generation in 2018. According to Deputy
Energy Minister Murat Zhurebekov, activities of unregistered, so-called “gray”, cryptocurrency
miners that migrated from China resulted in a deficit of electricity increasing the domestic
demand and rising the consumption by 8 percent in 2021 (Sorbello, 2021a). Moreover, too much
pressure on the existing electricity system created situations when electricity was shut down in
several regions, including some places in neighboring countries as well.

Case 2: Sweden

Sweden is one of the most sustainable countries in the world in terms of renewable
electricity production and mostly uses energy sources with low carbon dioxide emissions
(Mansson, 2016, pp. 16-22). Following the recent crypto mining ban in China, Swedish Financial
and Environmental authorities proposed to ban it in the EU as it prevents the implementation of
the Paris Agreement. However, the efficiency of that was debated by Vattenfall, Sweden’s power
company owned by the state. According to the company’s Head of Physical Power Management,
Henrik Juhlin, crypto mining has a potential to balance the load on electric grid and can both
decrease or increase energy consumption (Vold, 2021a). Also, it was stated by Eric Wall, chief

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investment officer (CIO) at Arcane Assets that there is no evidence that a significant part of the
country’s renewable production is used by mining activities (Handagama, 2022).

Comparing the two cases enables understanding how social, political, and economic
contexts might affect cryptocurrency mining in a country. The selected countries present two
opposite cases, with Sweden having more renewable energy and sustainable economy, and
Kazakhstan having access to large amounts of coal and other fossil fuels. While discussions of
crypto mining in Sweden are mostly dedicated to concerns around environmental threats of such
activities, controversies in Kazakhstan have a more complex nature and involve different
economic and environmental issues. In order to look closer to expectations of crypto mining in
both countries, different viewpoints to mining activities will be analysed using news articles and
video clips, as well as social media entries. Examples are a tweet by Eric Wall about bitcoin
mining (Erica, 2021), an article by the Diplomat (Sorbello, 2021a), and an article by Euronews
(Bateman, 2021), statements of governmental authorities.

This research paper analyses crypto mining in Kazakhstan and Sweden to find out how
expectations and imaginaries about an emerging technology are produced and contested. To look
closer at the topic, the thesis paper answers the following research question: How are
expectations and imaginaries about crypto mining formed and contested in Sweden and
Kazakhstan? The thesis will use content analysis of news articles and social media entries to
understand how societal expectations and imaginaries impact crypto mining and how mining
impacts society in the chosen countries. The aims of this research paper are to understand the
environmental and economic impacts of crypto mining and to identify the impact of imaginaries
and expectations in determining the development of crypto mining in both countries. Achieving
these goals is important to develop effective policies to manage cryptocurrencies.

In order to answer the research question, the thesis paper firstly looks at the existing
literature to see the gaps in it and explains the methods used for this research. The next chapter
(2) of the thesis analyses the relationship between crypto mining community and the government
in Sweden and Kazakhstan. The chapter examines how crypto currencies are regulated in both
countries and the conflicts of interests between the two groups. After that, chapter 3 scrutinizes
environmental impacts of crypto mining in both countries. Chapter 4 discusses the findings of
the case studies and the wide social implications of this research. Finally, the conclusion answers

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the research questions and demonstrates and then implications of the research for further
development of crypto mining and the thesis’ limitations are discussed.

1.2 Literature review

There is a limited number of articles that analyse the environmental and economic
impacts of cryptocurrencies from the perspective of society. For example, a paper written by
Pierce Greenberg and Dylan Bugden (2019) compares extraction boomtowns in the US to energy
consumption boomtowns. Whilst the former ones were created because of the extraction of fossil
fuels, the later ones appeared due to crypto mining activities. Using a case study of Chelan
County in Washington, they focused on the social impacts of crypto mining at the local level.
Energy consumption booms are located in places with cheap power sources and can create
conflicts over energy management and other social and environmental issues (pp. 162-163).
Whilst an article by Greenberg & Bugden provides an analysis of a specific case within a single
country, V. Kohli, et al. (2022) focus on comparing different countries in terms of efficiency of
crypto mining in those locations. By looking at multiple Bitcoin mining areas, it presents that “it
would be easier for major mining countries such as China, U.S.A, Germany and Canada to
allocate renewable energy compared to countries such as Russia, Iran, Malaysia, Ireland and
Kazakhstan” (p. 14). Similarly, Alonso, et al. (2021) also perform country comparisons to find
the most sustainable countries for cryptocurrency mining. The authors found that the most
sustainable countries to perform cryptocurrency mining are Denmark and Germany (p.1). A
different perspective is provided by by Badea & Mungiu-Pupazan (2021, pp. 48101-48102) and
Limba et al. (2019, pp. 2076-2077), who focus on the identity of cryptocurrencies as currencies.
According to the paper by Limba et al., the development of alternatives to traditional currencies
resulted from the willingness of people to escape from authority and gain some freedom. Overall,
although there are several papers focusing on country comparisons, analysing environmental,
economic, and social impacts of cryptocurrencies, not enough research has been done on how a
country’s context affects and shapes the development of crypto mining, and only a limited
number of papers look at social debates about it. Moreover, there exists a gap in the literature as
crypto mining in Kazakhstan and Sweden haven’t been previously analysed profoundly
considering together environmental, economic, and social implications. Thus, this research paper
aims to contribute to the existing literature by filling the gap and developing further the
discussions raised by the mentioned authors.

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 In order to answer the research question, the paper also uses literature on extraction
activities and the related protests in Kazakhstan to see similarities and differences between them
and the issues related to crypto currencies. Specifically, the paper by Dubuisson is used to
analyze the relation of protests near oil extraction areas in Kazakhstan to the land management
issue, which is also present in the case of crypto mining (2020, pp. 1-10). Also, the paper by
Grassman et al. is used as it provides discourse analyses of social responses to cryptocurrencies
in Sweden and Japan. According to their findings, people in Sweden seemed to be more open to
Bitcoin particularly perceiving it as an alternative to traditional money in addition to seeing it as
an investment tool (2021, pp. 169-194). Although some limited work has been done to research
the development of the crypto industry in Sweden and Kazakhstan, there are no papers looking at
Sweden and Kazakhstan together. Because more detailed case study analysis is necessary to
properly understand crypto mining in those country-specific contexts, this paper has a goal to
add up to the existing STS literature by providing deeper analysis of social and environmental
implications of crypto mining in both Kazakhstan and Sweden.

1.3 Framework and Methodology

The paper uses a combination of expectations and imaginaries framework, which enables
a deeper understanding of social implications of crypto mining. The expectations framework will
be applied to the selected cases to see how public expectations of potential benefits and threats
crypto mining may bring affect the path it would take. According to Van Lente & Bakker (2010),
expectations drive the development of science and technology. They are statements about the
future that have a description of the future situation and the roles. Expectations may guide
decisions and be translated into actions. Promises (positive expectations) may be turned into
requirements and obligations. Specific technical expectations can be related to more general
promises that new technologies bring. Also, there is a competition between different expectations
(pp. 694-696). The expectations framework enables analysis of different visions that various
stakeholders can have regarding cryptocurrency mining and see how expectations they have form
the future development of the innovation. Moreover, to have a closer look at the role of the state
in framing the innovation, the concept of sociotechnical imaginaries by Jasanoff & Kim (2009)
will be used. Their paper presented how nuclear power was presented and framed differently in
South Korea and the US, which led to two different paths the development of nuclear energy
took in those countries (pp. 119-123). The way imaginaries are formed and their role in

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determining the future are also discussed in a paper by Amelia Mutter (2019, pp. 1-9) by using a
case of public transport in Linköping, Sweden. Applying the concept to cryptocurrencies can be
helpful to compare how the governments of Sweden and Kazakhstan shape the image of
cryptocurrencies in the countries. That is important because whereas it seems that the Swedish
government considers cryptocurrency mining as a threat to their “green” government, the
government of Kazakhstan rather sees cryptocurrency mining as an opportunity for economic
development. Because sociotechnical imaginaries present how a government frames a certain
innovation, the concept will be used to understand how the governments of Kazakhstan and
Sweden envision the future of crypto mining in their countries. The expectations framework will
furthermore be used to see a broader picture by enabling analysis of the behavior of different
stakeholders. Also, using the framework can help scrutinize how society was affected by crypto
mining. The main differences between imaginaries and expectations are explained by Mutter in
the following way:

One aspect that sets sociotechnical imaginaries apart is that it emphasizes the normative
aspects of the understandings of the future. This emphasis contrasts, for example, the
sociology of expectation, which instead emphasizes the performative nature of futures.
Through the act of expectation, the future becomes real for the subject whether they hope
or fear that their expectations will come to pass. (p. 3)

This research paper uses both theoretical frameworks as in this research, expectations
and imaginaries are complimentary to each other. While imaginaries enable a deeper
understanding of how cryptocurrencies have been framed in Sweden and Kazakhstan to promote
certain ideas among the general population, expectations are important to analyze how ideas,
hopes and promises, related to crypto currencies affect and construct the future of the crypto
industry. Moreover, expectations and imaginaries can affect each other as how a subject is
framed, and how somebody can change one’s opinion about it, and visa-versa. The interrelations
of imaginaries and expectations related to crypto currencies in both countries is discussed later in
this paper. Overall, as there is still very limited STS literature on both expectations and
imaginaries in the case of crypto mining. This paper aims to fill the gap in the literature by
discussing how expectations and imaginaries interrelate with each other by analyzing the
development of crypto mining in the selected countries.

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 2. CRYPTO MINERS VS GOVERNMETS
To begin with, crypto mining, and crypto currencies in general, have just started
developing recently and remain to be new and even unknown to many people worldwide. Thus,
regulation of the industry is currently in progress with most of the governments still deciding
how to approach the innovation. Also, as the prices of crypto currencies often and significantly
fluctuate, and the market, thus, remains unstable, and expectations from crypto industry keep
changing. Depending on whether crypto currencies promise large profits as the prices rise, for
example, or foreshadow a crash of the prices and huge losses for the investors, the position of the
government, and thus their framings regarding crypto currencies may change. However, even
when the prices are high and the market experiences a boom, it is important for governments to
predict threats and bubbles that can be detrimental for citizens in the long term. Therefore, if they
expect crypto currencies to encourage criminal activities and destabilize the situation in the
country in general, the authorities may regulate them more strictly and frame accordingly. By
looking at government regulations in both countries in this chapter, the paper analyses how the
governments of Sweden and Kazakhstan frame crypto mining through different policies, how
those regulations and the following imaginaries affect crypto mining community in both
countries. Also, the chapter analyses how expectations affect the governments’ policies. The
chapter shows how different expectations of the governments and the crypto mining
communities resulted in the conflict of interest between different power groups both in Sweden
and Kazakhstan.

2.1 Kazakhstan
Kazakhstan recently experienced a crypto boom and became one of the global leaders in
crypto mining. A sudden rise was a result of the mining ban in China in September 2021 and
migration of miners to Kazakhstan, which shares a border with China and has a cheap energy
(Shin, 2022).

2.1.1 Regulations

The increase in volume of crypto mining in Kazakhstan has made it a necessity to

regulate the industry. The need for the regulations was expressed also by Eset Butin, the head of
the Kazakhstan Association of Blockchain and Cryptocurrencies. He said that the most important

11
issue for their organization is a legal regulation of the crypto market and wide usage of
blockchain technology. He stated that a lot of work has already been done for the development of
the crypto industry in Kazakhstan and called the year of 2018 the year of “regulation”. One of
the most important reasons of such statement is the launch of an authorized jurisdiction called
Astana International Financial Centre (AIFC) in 2018 (Galiev, 2018). The main goal of AIFC is
to develop the country’s nonbanking financial sector and become an international financial hub
(Crawley, 2022). AIFC has its own law and its own court and has a right to issue licenses to
companies to provide financial services and licenses for activities in the field of digital assets
(Beknazarov, 2021b). Another reason why the year of 2018 can be called the year of change for
the crypto mining in Kazakhstan is that starting from the second half of 2018 that National Bank
of Kazakhstan decreased the pressure on the market and even started using a platform based on
blockchain. Moreover, the adoption of necessary legislation within AIFC eased the work of the
market participants by creating opportunities to open trading platforms, enabling operation of
custodial firms, and establishing the mechanism for conducting Initial Coin Offering (ICO)
(Galiev, 2018).

The shift in the government’s position in 2018 can be associates with the speech of
Kazakhstan’s ex-president, Nursultan Nazarbayev, at the Astana Economic Forum, where he
suggested to regulate cryptocurrencies on an international level (Galiev, 2018). While
Kazakhstan is officially a democratic country, it is referred as soft-authoritarian state (Schatz,
2009) with an elite being able to define the political agenda and influence political outcomes. (p.
203) President plays an important role in defining the country’s strategy, and thus his
instructions to regulate the market can act as a turning point for the crypto industry in
Kazakhstan. Such a shift was also praised by some players of the industry. The head of the
Kazakhstan Association of Blockchain and Cryptocurrencies commented that overall, despite
some conservatism and slowness, work done within AIFC may be praised for creating a legal
base for all business processes in the market of cryptocurrencies, making AIFC one of the few
such regulating platforms worldwide (Galiev, 2018). Although the nature of cryptocurrencies by
nature represents opposition to centralization, some participants of crypto market in Kazakhstan
demonstrated preferences for having some legal framework to work with. Such reaction is
explained by the fact that, apparently, not all members of crypto community in Kazakhstan act
ethically. As some investors have already lost their money by investing to projects with

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problematic documentations, the image of the blockchain industry can be under threat. President
of the Association National Association of Blockchain and Data Center Industry (NABDC),
Alan Dorjiyev, stated that

Illegal Bitcoin mining is harmful to our country. We're pleased to see the local authorities
shut down those who fail to comply with local laws and regulations. While many illegal
miners have setup operations in recent months, there are many Bitcoin mining companies
who've been operating in the country for many years who fully comply with all laws, pay
their taxes, and provide local jobs. Bitcoin mining brings important tax revenue,
innovation, and jobs to our local economy, and we believe Kazakhstan will continue to
serve as a highly sought-after home for Bitcoin miners willing to follow the rules.
(GlobeNewswire, 2021)

Therefore, it is important for mining companies that try to act in accordance with business ethics
to prevent companies that deviate business norms from collecting investments and operate in the
market. Nevertheless, instead of simply following the rules dictated by governmental authorities,
the industry players are willing to have a system that allows self-regulation. As it was said by
Eset Butin, the Kazakhstan Association of Blockchain and Cryptocurrencies stands for letting
licensed companies choose the rules of the game (Britska, 2017).

Based on the information provided, it is possible to divide the key players in the crypto
industry in Kazakhstan into three groups that are involved in a power conflict. The first group is
the government and the related authorities (AIFC) that want to regulate the market in the favor of
public by imposing taxes and other regulations. As it was said by Bagdat Musin, the Minister of
Digital Development, Innovation and Aerospace Industry of Kazakhstan, “It is important to
legalize all the crypto mines to ensure that investments to the industry will benefit every citizen
of the country” (Skiban, 2021). The second group is the licensed firms and organizations wanting
to protect the reputation of the industry, eliminate “dishonest” players, and regulate the market in
their own favor. Although there is a power conflict between first and the second groups related to
regulating the crypto industry, they seem to collaborate with each other to develop the crypto
industry in Kazakhstan. While describing the joint work of NABDC and governmental
authorities, Alan Dorjiyev noted

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 Since day one, we've worked closely with the Ministry of Energy and the Ministry of
Digital Development, and we continue to do so today. We are proactively collaborating
with them to create a fair and transparent market where those who follow the rules are
able to operate while those who do not will be forced out of business. (GlobeNewswire,
2021)

Unlike the first two groups that prefer some forms of legal regulations, the third group consists
of firms striving to generate fast profits and preferring having no rules imposed on the market.
Also, one can expect that the third group has no or only limited power in their hands. The
government has a power to influence the law, and the members of the second group can join their
forces by creating the association, for example, and negotiate with the government through it.
However, when it comes to unethical businesses, there is a high chance that other companies
operating in the industry can easily disclose their downsides, and thus be unwilling to unite with
them. Although preferences of all groups overlap, they seem to have conflicting expectations
regarding regulation of the cryptocurrency market. Whether the expectations of these three
groups eventually construct the future of the industry in Kazakhstan is discussed later in the
paper.

2.1.2 Investment tool

According to AIFC, cryptocurrencies are investment tool and classified as unsecured

digital assets. According to Kazakhstan’s law, turnover (purchasing, storing, and sale) of
unsecured digital assets is prohibited, but there is currently no legal punishment for violation of
the restriction (Beknazarov, 2021a). Within AIFC the turnover of unsecured digital assets is
permitted, and their regulations are based on the “FinTech Rules”. Kazakhstan currently has no
domestic crypto exchanges yet, it has a licensed crypto broker (Beknazarov, 2021b). The main
incentive to promote crypto mining in the country is the same for the government and the firms
in the market. Both parties try to gain some financial gains. However, it is questionable why
ordinary people may want to risk their finances by being involved in crypto mining and other
crypto related operations. First of all, it should be noted, that national currency, tenge (KZT),
have been fluctuating and has devalued in relation to US dollar ($) in the last five years. If on
May 26th of 2017, 1 US dollar was worth 310.69 KZT, exchanging tenges to dollars nowadays

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will cost more with 418.55 tenges per dollar. (XE, n.d.) Such decrease in the value of national
currency makes it less attractive for locals to open deposits in national currency. Moreover, the
banking system of the country only provides limited protection for deposits kept in local banks.
The maximum amount an individual can return from a bank in case of its bankruptcy is 15
million tenge only, which equals to approximately to 35 838 US dollars using the exchange rate
of 418.55 tenges per dollar (egov, 2021). Similarly, as it was commented by Eset Butin, deposits
in foreign currency also became less profitable and some banks became less reliable. Such
situation in the market caused people to seek alternatives to traditional savings. Therefore,
cryptocurrencies have become the subject of attention for local investors as locals consider them
as replacements to bank deposits (Britska, 2017).

The government reacted to such trends in behavior of citizens by adapting to the changes
in the market. For example, in July 2021 the Kazakh Association of Blockchain and Data Center
Industry announced that clients of local banks soon will be able to officially use cryptocurrencies
for investment purposes. It was explained that crypto exchanges registered with Astana
International Financial Center (AIFC) are planning to work with local banks for that purpose. To
access the crypto exchange user will need to have a legal account in one of the local banks
registered with the AIFC. The account will allow the clients to transfer money, purchase
cryptocurrencies, and use them to operate on the exchange market. After the clients transfer the
generated income back to their accounts, it will be accessible in the form of traditional money.
The bank then will play the role of an intermediary for transactions. The described opportunities
are expected to become available after the launch of the pilot project, which will let the
government to see the benefits and drawbacks of digital assets (Arystanbek, 2021). According to
Bagdat Musin, the National banks’ support made it possible to register a crypto exchange within
AIFC. He explained that people who mine cryptocurrencies in Kazakhstan will be able to sell
them through the exchanger, which will create a closed circle and generate tax revenue for the
country from the sales (Salinger, 2021).

The information provided shows that both the government and the general population in
Kazakhstan consider crypto mining as investment tool rather than a substitute to money. As it
was mentioned earlier, locals are interested in crypto mining because simply saving their money
in national currency as bank deposits can be considered as unprofitable. From the perspective of

15
the government, crypto mining also considered as investment tool, which can generate national
income in the form of taxes. The creation of legal framework within AIFC and development of
the pilot project of crypto exchange can prove that. Furthermore, there may exist an interplay
between the way the government formulates and positioned crypto mining and expectations from
crypto mining expressed by the mass population. For example, the government’s language
selection in describing crypto mining can be influenced by the expectations of the population.
The opposite is also possible as certain formulations of the governmental authorities shape the
expectations of the locals. Thus, on the one hand, the imaginary created by the government as a
result of framing crypto related activities as investment tools can be described as a reaction to
expectations shown by the mass population. On the other hand, the expectations of the locals that
crypto currencies should be treated as investment tool can be formed due to government’s
regulations that frame crypto currencies as digital assets.

2.1.3 Tax

Moreover, the increased electricity tax for crypto mining activities has been imposed
since January 2022 (24 Khabar, 2021). That means that crypto miners need to pay a fee of 1 KZT
per kilowatt-hour (kWh) of electricity used for crypto mining (Asmakov, 2021). It is expected
that crypto mining will bring at least 5 billion tenge to the budget of the country in 2022 (24
Khabar, 2021). Furthermore, the tax should let the government to regulate the market by
revealing “grey” miners and reduce "uncontrolled consumption of electricity" by crypto miners
(Kursiv, 2021). According to Bagdat Musin, the fee of 1 tenge per 1 kWh is not significant and it
is not expected that the amount will increase dramatically. He also stated that the mining industry
should become profitable for the country (Salinger, 2021). In addition, the Minister of Digital
Development, Innovation and Aerospace Industry of Kazakhstan noted that the miners have
opportunity to not to pay corporate income tax (CIT) and personal income tax on employees by
registering with the Astana hub (IT Tech Park) (Skiban, 2021). However, local mining
community reacted negatively to the tax. For example, the president of the National Associate of
Blockchain and the Data Center Industry of Kazakhstan, Alan Dorjiyev noted that such actions
would repel investors (Asmakov, 2021). He added that miners already pay several billions as
taxes to the government. Also, in his opinion, crypto miners already experience financial losses,
considering that they also need to pay approximately ten to fifteen billion of tenge as salaries for

16
workers and to purchase and establish tech appliances. The objection was also supported by
other miners, who noted that electricity prices have already risen several times. A representative
of one of the largest mining firms of Kazakhstan also explained that the industry is extremely
dependent on electricity, which amount up to 95 % of their expenses (Kursiv, 2021). Thus, tax
again represents the conflict of interest between the groups discussed earlier, crypto mining
community and the government, that have two different views toward the tax. Whilst from the
perspective of the governmental authorities, tax should not be a large burden to miners, the
industry players complain that will increase their expenses that are already high enough.

Another reason why the tax is unwelcomed by the industry players is that it will also
threaten the competitive advantage of crypto mining in Kazakhstan compared to other countries
in the form of cheaper electricity costs. If Kazakhstan loses its advantage, the market players will
suffer from outflow of investment to other countries. However, that scenario is also unfavorable
for the governmental authorities. As it was said by the Minister of Digital Development,
Innovation and Aerospace Industry of Kazakhstan, their goal is to legalize crypto exchanged and
ensure that crypto currencies mined in Kazakhstan will be traded on national exchanges (Skiban,
2021). That can prevent outflow of finances abroad as instead of being sold abroad, as they will
be traded locally, which will also benefit the country in the form of the collected sales tax. Thus,
both groups have a common goal to promote the development of Kazakhstan’ crypto industry,
but their expectations how that goal will be realized is different. Furthermore, although the
imposed tax on crypto mining has received negative feedback from the mining community, the
government has an intention to increase it in the future. According to the Minister of Finance,
Marat Sultangaziev, government of the country considers increasing a fee imposed to crypto
miners from 1 to 5 tenge. He also mentioned that technology for mining will also be imposed and
noted that the fee on technology and a report will be collected once a quarter even if no
electricity has been used (MyBuh.kz, 2022). The presiding, thus, demonstrates that the
government has more power to determine the path the industry would take in Kazakhstan.

2.1.4 “Grey” miners vs “white” miners

The development of crypto mining in Kazakhstan has also created a problem of increased
illegal mining activities. As crypto mining requires significant amounts of energy, the mining
created a pressure on the country’s electricity system and resulted to an electricity deficit in the

17
country (Sorbello, 2021b). The minister of energy Magzum Mirzagaliyev in the meeting with the
president Kassym-Jomart Kemelevich Tokayev on October 2021 noted that the so-called "gray"
(illegal) miners consume approximately up to 1200 MW of electricity, and that the work to
identify them continues (Official website of the President of the Republic of Kazakhstan, 2021).
The Vice Minister of Digital Development, Innovation and Aerospace Industry of the Republic
of Kazakhstan, Askhat Orazbek, talking about the deficit of electricity, also mentioned that the
electricity surplus in 2019 is no longer there (BBC news, 2022). The authorities of Kazakhstan
responded to the problem of electricity shortage followed by the crypto boom by auditing and
suspending of illegal crypto mines. According to the press realize of the Agency for Financial
Monitoring of Kazakhstan, it conducted an audit of mining activities, which led to voluntarily
suspending of 55 mining farms’ activities. Besides, the illegal activities of 51 mining farms were
also suppressed. They illegally connected to sources of energy supply and avoided paying taxes
and custom duties. Also, there were cases of illegal electricity resale to third parties. In total, the
Agency for Financial Monitoring registered 25 criminal cases and seized more than 67 thousand
pieces of equipment worth about 100 billion tenge (nearly $200 million). The legal actions
resulted to the decrease of the daily electricity consumption in Kazakhstan by 600
Megawatt/hour (Financial Monitoring Agency of Kazakhstan, 2022).

Some of the companies that stopped their activities are affiliated with Bolat Nazarbayev,
the brother of Kazakhstan’s ex-president, and Alexander Klebanov, a well-known businessman.
Also, the former Chairman of the Board of JSC "National Company "QazaqGaz" in Aktobe
region, Kairat Sharipbayev, and a Kazakh politician, Yerlan Nigmatullin were mentioned to be
involved. Moreover, some of the illegal farms were associated with one of the richest
businessmen of Kazakhstan Kairat Itemgenov and the former head of the Department of the
Ministry of Internal Affairs Tlegen Matkenov (Financial Monitoring Agency of Kazakhstan,
2022). One explanation for the involvement of some political and business authorities in illegal
mining activities in the country is that Kazakhstan has high levels of corruption, which allows
individuals in high positions to get easier access to land and other sources of capital (RISK &
COMPLIENCE PORTAL, 2020). Therefore, mining firms connected to individuals holding
either political or financial power can have an advantage in relation to other companies. Thus,
we can see that political factors play a significant role for crypto mining business in Kazakhstan.
Furthermore, as mining companies can expect to get easier conditions by connecting with

18
authorities and being involved in illegal activities such as bribes and corruption, they can be
prone to do so. Politicians may be willing to participate in that due to expected financial gains.
Thus, expectations in this case can form a “reality” with more criminal activities. Threats that
crypto currencies present, though, are taken into account by the authorities of Kazakhstan that
also demonstrated them to the population to mitigate the risks they carry. For example, in the
official report, the Financial Monitoring Agency of Kazakhstan highlighted that cryptocurrency
can be used to finance terroristic activities, buy weapons and drugs, and threaten economic
security of the country (Financial Monitoring Agency of Kazakhstan, 2022) Nevertheless, even
though illegal mining has some risks, it also can be used by some authorities as an instrument to
cover inefficiencies of the local electricity industry (Sorbello, 2021a). They accused and framed
illegal mining as a reason of electricity deficit and a cause for the electricity issues in the
country, but the initial reason may be different. Kazakhstan’s coal plants are aged, and the power
generations are regularly affected by snowfall and frost during winter times (Olson, 2022).
However, politicians and the national energy company keep insisting that the problem is mainly
caused by the miners. According to a Member of Parliament (MP), Ekaterina Smyshlyaeva,
electricity deficit is caused by “grey” crypto miners that infinitely consume energy and stated
that almost a fifty percent of the crypto mining companies operate illegally and neglect
regulations. (Kursiv, 2022). Kazakhstan Electricity Grid Operating Company (KEGOC) also
noted that digital mining is the main reason of abnormal growth of consumption and an increased
risk of major accidents, which destabilizes stable work of Kazakhstan’s power plants (JSC
"KEGOC", 2021).

The electricity problems also have affected crypto miners. Some were even compelled to
shut down their mines. As it was stated in the twitter post “Little sad to shut down our mining
farm in south KZ.… Country risk played out” (Didar, 2021). Although ex-Energy Minister
Magzum Mirzagaliyev had stated that electricity to “white” miners will not be cut, even they had
problems with electricity blackouts. For example, according to a foreign software developer,
thirty-three mining machines that he has in Kazakhstan that are operating legally worked only 55
per cent of the time due electricity issues (Moldabekov, 2021). Thus, it seems that the electricity
problem has created a conflict between the local electricity company and crypto miners. While
the electricity company states that it is forced to temporarily cut off energy time to time due to
high pressure on electricity grids, the miners complain that blackouts restrict their work and

19
accuse the electricity industry for created inefficiencies. For example, Aibolat Balgozhin, chief
power engineer of a company named BTC KZ, stated that “…we are kept in the dark as to when
we would be able to work at full capacity or what solutions the power grid operator, KEGOC, is
going to come up with” (Bisenov & Tobin, 2022). Thus, the situation demonstrates that different
parties frame the problem of electricity shortage differently: both miners and the electricity
company accuse each other and argue that they suffer from and must deal with the issue created
by the other party. From the perspective of a political economist, Almas Chukin, “…. As
[cryptocurrency miners] came into the market, alongside accidents and repairs, they helped
unveil a situation that has been difficult for a long time” (Sorbello, 2021a). Indeed, while crypto
mining certainly has increased the consumption of electricity in the country, the inefficiencies in
the electricity system can be hidden intentionally by the authorities through measures like
financial audit to decrease the level of energy consumption by shutting down illegal crypto
mining firms.

Compared to illegal “grey” crypto miners, legal “white” miners don’t seem to be
restricted and framed negatively by authorities. Such attitude was also instructed by the president
on his meeting with the minister of Energy (akorda.kz, 2021). The different behavior towards
“grey” and “white” miners may be explained by the potential benefits “white” miners can bring
to the economy of Kazakhstan. As it was stated by Alan Dorjiyev, President of the Association
National Association of Blockchain and Data Center Industry (NABDC), “white” crypto miners
can generate tax revenue and lead to creation of new jobs, whilst the actions of illegal miners are
harmful for the country (GlobeNewswire, 2021). Indeed, a crypto mine located in Ekibastuz, for
example, became a place of work to 150 people, creating career opportunities for young people
in Kazakhstan (BBC news, 2022).

The main motivation for crypto miners, private entrepreneurs, and investors to participate
in crypto mining activities is a monetary reward. For instance, the founder of one of the largest
crypto mining companies of Kazakhstan called Energix, Erbosyn Sasenov, finds it exciting to
listen to the sound of working computers as he associates it with the sound of money (digital
money) (BBC news, 2022). It seems that a financial gain is also the main motivation of
authorities to develop crypto industry in the country and encourage “white” miners. According to

20
the Government Relations Coordinator of the Kazakh Association of Blockchain and Data
Center Industry, Sergey Putra:

The global premise is that crypto turnover is a fairly large volume of finance. It is billions
of dollars of daily turnover around the world. And even if Kazakhstan takes a fraction of
a percent, even one percent of this turnover, this is serious money that will come to
Kazakhstan in the form of investments and that will remain here in the form of taxes,
jobs, and salaries. This is a very large industry, which Kazakhstan is still bypassing ….
(Arystanbek, 2021)

Thus, we can see how an expectation to generate profit drives both industry players and
the authorities. Moreover, the different attitudes towards “white” and “grey” crypto miners in
Kazakhstan showcase a significant role of expectations in defining governmental policies in the
country. As “white” miners promised more jobs and tax revenue, the government was more
supportive to them in comparison to “grey” miners. In contrast, as authorities expected that
increased amounts of crypto mining can disclose the electricity problems in the country and that
illegal miners will not bring any tax revenues, they did not hesitate to shut them down and frame
in a negative way. Thus, two different and contrasting imaginaries have been created, picturing
legal miners as “good” and illegal miners as “bad”.

2.2 Sweden
Sweden has become one of the most popular places for crypto currency mining in recent
years. One of the reasons is that the electricity produced in the country is almost emission free as,
according to International Energy Agency (2019), fossil fuels constituted only 2 percent of
electricity generation in 2017 (p. 10). Electricity in Sweden is mostly generated with the use of
hydropower, which accounts for 39, 7% of domestic electricity production, and nuclear energy,
which accounts for 40% of electricity generation (p. 93). As hydroelectricity is generally cheaper
compared to that generated from fuels, the country has gained the competitive advantage to attract
the crypto miners (Marinoff, 2020). Although Germany has the largest energy market in Europe,
prices for electricity in Sweden are almost one-third of those in Germany. Moreover, crypto
miners value Sweden’s economic and political stability, as well as an energy system with low
carbon emissions, which is important for generating funds from investors worldwide. According
to Philip Salter, head of operations of Genesis Mining Ltd. based in Hong Kong, “There is a
21
rather important strategic shift away from mining in China to mining in western countries like
Sweden as bitcoin investors become more public and want more stability and critical safety”
(Marinoff, 2020).

Like in Kazakhstan, the main motivation of crypto miners in Sweden is to generate

profits. For example, Sweden-based “Arcane Crypto” firstly had operated only as research and
investment company, and then decided to start its crypto mining activities in the Nordic region.
In September 2021 the firm announced that it planned to buy 352 mining machines. CEO of the
company, Torbjørn Bull Jenssen, stated that “We expect our mining operation to bring
substantial revenue to the Arcane Crypto group. At current market conditions, the miners we
have ordered would generate around SEK 3.5m [USD 400,000] in monthly revenue and be
highly profitable” (Vold, 2021b). Chief Executive Offficer (CEO) of Noble Pole, Patrik Öhlund,
also notes an openness of Swedish government to global bitcoin giants. He mentioned that the
owner of Canaan Creative in Beijing, a Chinese crypto mining companies that established
operations in Sweden, told that “… they felt in Sweden you have an open and stable society
where you can discuss cryptocurrency and voice opinions” (Bitcoinprice, 2022). Another
important factor mentioned by a local researcher, Claire Ingram Bogusz, is that Sweden’s
financial authority has been open to crypto currencies. She noted, “That creates a lot of certainty
here when you’re operating in an uncertain space” (Bitcoinprice, 2022). Moreover, as it was said
by Ingram Bogusz, “There’s a very high-level of knowledge about it here, and a high-level of
digital competence in the Fintech space” (Bitcoinprice, 2022). Indeed, Stockholm is one of the
largest hubs for investments in financial technologies in Europe that became a home for such big
start-ups like Klarna and Zettle by Paypal (Bergsten & Zimdahl, 2021). Fintech firms based in
Sweden raised 78% of approximately $3.3 billion generated by FinTech firms in Nordic region
from 2015 to 2019, which can be explained by country’s education system that emphasizes
engineering, design and innovations (FinTech Global, 2020). Bogusz commeted “We may not be
the size of Hong Kong or London, but it’s hard to find that level of digital competence in other
financial centres” (Bitcoinprice, 2022).

Swedish authorities have shown a willingness to develop crypto mining in the country by
promoting bitcoin mining, especially in the north areas, where such data centers as Helicopter
Airbase Area and Harads Industrial Park Area are located. According to Tomas Sokolnicki, Head

22
of Data Centers in Sweden, commenting the interest from foreign firms to operate in Sweden,
“It’s not only the low cost of operations but above all the Swedish government’s eagerness to
embrace new technologies which presents an opportunity” (Bitcoinprice, 2022). Besides, Swedish
authorities have raised their interest towards crypto currencies earlier than many other countries
(Smile-Expo, 2018). For example, Sweden has the first politician (Mathias Sundin) that used
crypto currencies for his election campaign in 2014. Also, the country has the BTCX Exchange
which started working in 2012, while Kazakhstan just started the development of a crypto
currency exchange. Moreover, Sweden was the first country globally that invested in Bitcoin
derivatives. A digital asset named Bitcoin Tracker One, which is backed up by Bitcoin at the rate
of 1:1, became available for purchase by Swedish citizens in 2015 after going through the checks
of the Finansinspektionen. Besides, in contrast to Kazakhstan, the Financial Authority of Sweden
(Finansinspektionen) has legalized Bitcoin as a means of payment (Smile-Expo, 2018). Thus,
although both countries tried to provide legal frameworks for enabling operations with crypto
currencies, Sweden has more beneficial jurisdiction for the crypto industry, which made it one of
the leaders in cryptocurrency distribution among European countries. Moreover, early adoption
of crypto currencies in Sweden increased public awareness regarding their usage as a payment
method. Based on the information provided, both crypto miners and the government in Sweden
are interested in the development of crypto industry in the country. While the miners have
expectations that the country’s openness and political stability, as well as sustainable energy
system will benefit their companies in the long run, the government expects that their efforts to
support the development of crypto mining will grant them an opportunity for technological
advancement.

2.2.1 Regulations

Despite general openness, Sweden has some contradicting regulations on

cryptocurrencies. On the one hand, Swedish government was emphasizing high risks and low
protections of investments in cryptocurrencies. For example, Finansinspektionen (FI) noted that
such investments are “unsuitable for most… consumers” as it is “difficult, if not impossible, to
value on a credible basis” (Freeman Law, 2022). One of the reasons of authorities being cautious
is that cryptocurrencies, unlike flat currencies, are not backed the government and possess no
intrinsic value, which also makes it difficult to value them (Freeman Law, 2022). Another reason

23
is that there have already been some scam cases when investors were left with worthless tokens.
For example, a firm named “Starflow” provided false documentation and used fake social media
accounts to increase the number of followers of their profile (Freeman Law, 2022). On the other
hand, Swedish authorities have encouraged usage of new technologies, including crypto
currencies, in the country. For example, the country’s central bank, “Riksbank”, acknowledged
the potential value they can bring. It offered the parliament to invest nearly $3.1ml annually
during five-year period to transform the country into a digital currency innovation hub, which
contradicts to the warning made by other authorities (Freeman Law, 2022). Moreover, “State
Pension Fund AP7”, the pension plan provided by the government as an alternative to private
options, provides an opportunity to indirectly invest in crypto currencies. As two firms in the
fund invest in them, nearly five million local citizens that invested in the fund are also indirectly
involved in that. In spite of the high volatility of crypto currencies and risks that they bring, the
government has not prevented such pension funds from investing to crypto currencies.
Nevertheless, Swedish legal system has imposed strict and inconvenient rules on crypto
currencies for the locals even though digital payments are widely used in the country. For
example, the citizens are obliged to report every cryptocurrency transaction to the local tax
authority, Skattevert (Freeman Law, 2022). According to the Swedish law, crypto currencies are
taxable assets, wherefore Skattevert defines such transactions as “individual transactions
involving assets” (Freeman Law, 2022). The authorities encourage people to provide information
for every transaction involving purchasing, selling, lending, and spending of crypto currencies on
their tax reports. Doing so makes it difficult for residents to properly declare their taxes and
avoid civil liability. There are also strict punishments for tax evaders in Sweden. For instance,
Linus Dunker, a cryptocurrency investor, received a 300% tax bill on the profits and had to pay a
fine worth $1 million as penalties for not disclosing his trading activities to the authorities for
several years (Freeman Law, 2022). Thus, citizens must go through inconvenient procedure of
tax reporting every year to avoid high fines, which can discourage locals to use cryptocurrencies.
In contrast, Sweden’s legal system encourages holding crypto without selling as by doing so that
they can pay lower taxes, which works as an incentive to keep crypto currencies (Freeman Law,
2022). Overall, although the government showed a willingness to promote Sweden as a
cryptocurrency hub, it is unclear how it wants to position crypto currencies to the population as
regulations and taxes imposed by authorities contradict with each other in that sense.

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 The given information shows that the government of Sweden has created controversial
imaginaries by both incentivizing and discouraging crypto related activities. Moreover, it
demonstrates how these imaginaries affect people’s expectations. For instance, the heavy
punishments for tax evaders ensures that people will expect and prefer greater benefits by
complying with the laws and paying the taxes than experiencing significant financial losses by
breaking the laws. That is completely different from the situation in Kazakhstan, where illegal
miners are incentivized to evade tax payments as there are no harsh punishments for that. So, one
may assume that Swedish government uses expectations as an instrument to affect public
behavior, while Kazakhstan’s authorities have not considered that yet. Furthermore, based on the
legal framework of Sweden, it is seen that an imaginary that the government presents to citizens
is “investment tool” as it classifies them as assets, and not money, which is similar to the
position of Kazakhstan’s government. However, unlike Kazakhstan, Sweden allows usage of
cryptocurrencies as means of payment as well (Freeman Law, 2022). In addition, the examples
of taxes in both countries disclose power conflict between crypto miners and the government.
However, the crypto mining community in Kazakhstan showed greater resistance towards
regulations, in comparison with Swedish one. That can be explained by the fact that crypto
community in Kazakhstan has a greater power because the industry players are united through
organizations like the Kazakhstan Association of Blockchain and Cryptocurrencies which can
negotiate better conditions with the government. In contrast, it seems that in Sweden the crypto
community does not have such power.

2.2.2 Illegal miners

As it was mentioned earlier in this chapter, the strict regulations imposed by the
government of Sweden to crypto industry can be the government’s response to unethical
behaviour shown by crypto miners. For example, two crypto mining companies in a Swedish
county, Norrbotten, vanished without paying their bills (BitcoinExchangeGuide, 2018).
Norrbotten is located within Arctic Cycles, which means less costs to cool down the mining
machines. That prospected a success to the crypto mining industry in the region. The
municipalities of Älvsbyn and Kalix welcomed crypto miners as they brough investments to the
area. In Älvsbyn the crypto mining business owned by the US based NGDC was succeeding
initially, but then abruptly suspended their work. The reason behind their sudden stop is that they

25
did not pay their outstanding electricity bills, which caused Vattenfall, the state-owned electricity
company, cut the electricity supply for the mining activities. The amount of the outstanding bills
was equal to 14 million Swedish Kroner, which was equivalent to 1.5 million US Dollars. As the
electricity company wasn’t assured that it can return their financial losses, it applied for seizure
and bankruptcy of NGDC. The local government failed to reach NGDC to remove the mining
equipment from the premises owned by the municipal court, but, luckily, didn’t experience any
losses. The second case happened closer to the border with Finland. The company named
Chasquitech initially had planned to start Bitcoin mining in the region, but eventually has not
even start their mining activities. As a result, the municipality of Kalix was left with an unpaid
rent for the place occupied by the mining firm worth more than 500,000 Kroner, nearly 55,000
US Dollars. Such losses experienced by the governmental authorities, perhaps, created negative
expectations that resulted in more strict approach towards crypto industry.

Illegal activities connected to crypto currencies have also significantly affected the public
expectations. Fraudulent activities with the use of blockchain technology leaded to the creation
of negative associations to crypto currencies within general population. For example,
cryptocurrencies were used for fraudulent activities in Instagram. Luxury products of companies
like Gucci, Louis Vuitton, and Apple were advertised for lower prices to the users (Gromek,
2019). Before completing the purchase, buyers were required to exchange their money to
cryptocurrency. After the transactions were made the sellers disappeared with the money. They
deleted their Instagram accounts and the buyers neither received the products nor could return
their money back. It seems that similar situations happened frequently, even if the law
enforcement authorities were notified. The funds were transferred using one of the
Cryptocurrency exchange brokerage companies to a digital cryptocurrency wallet address
(DCW), which is an analogy of a traditional bank account number but has limited traceability.
Thus, it was hard to find and punish the owners of fraudulent accounts. Moreover, it was hard to
recognize such accounts initially as the accounts that advertised luxury products were relatively
new and had large numbers of new followers, which can look assuring to young people at age
25, their target audience. Magnus Karlsson, a strategic analyst at the Swedish Police, highlights
the difficulties of solving the problem as an issue to identify the holders of cryptocurrencies and
reverse the transactions (Gromek, 2019). The reason why cryptocurrencies are popular among
criminals is that the transactions to cryptocurrency wallets are untraceable, which make it hard to

26
find the perpetrator and return the money. Therefore, he states, that users of social network
should ensure themselves that the accounts that sell goods and services are reliable, so any online
purchase should be proceeded only after some research has been done. According to a
compliance expert of a leading Nordic Cryptocurrency Brokerage Platform,

As our customer service engages way quicker with the users than the Police - our
employees flag suspicious accounts or wanted to engage with Instagram customer service
via their support email. Unfortunate as the customer service of Instagram is literally non-
existent, it increases the delays to take countermeasure. (Gromek, 2019)

Although Instagram representative stated that company proactively fights against this type of
content, it seems that only limited actions were taken (Gromek, 2019). That situation also shows
the great dependence of the industry on social media platforms disclosing their power to affect
public perceptions. It is interesting that even when no particular actions were taken by social
networks to influence the direction of the industry’s development, the impact they have on
people is still significant. For instance, their passive engagement in preventing the fraudulent
activities connected to crypto currencies eventually results in more people experiencing financial
losses and, thus, generation of negative expectations towards crypto industry. Negative
expectations then also result on more strict regulations, as it was mentioned earlier by
constructing a “reality” with more restrictions from the central bank of Sweden. According to the
governor of Sweden's Riksbank, Stefan Ingves, it is plausible that, because of their increased
popularity and use in crime, cryptocurrencies such as bitcoin are going to be regulated
(Robertson, 2021). Ingves said that "When something gets big enough, things like consumer
interests and money laundering come into play," and continued "So there's good reason to
believe that [regulation] will happen," and “[regulation] will probably come at different times in
different areas” (Rolander & Hoikkala, 2021). He also showed his concerns regarding bitcoin’s
environmental impact while giving a speech to the Swedish economics association,

In the case of bitcoin, one has tried to replace the state’s function as guarantor for money
with technology that limits the supply. … bitcoin is very ineffective to use, as each
payment requires large amounts of time and energy. Nor is there anything to limit the
supply of copies of bitcoins in the form of other cryptocurrencies. (Ingves, 2021, p. 6)

27
Answering the question about how the central bank is going to address the stated challenges, he
said

Well, we must also adapt our activities to the new environment. … But what is new this
time is how quickly we may need to adapt. When it comes to the payment market, I think
the ambition should be for the Riksbank to promote harmonisation and competition on
equal terms by offering attractive platforms for banks and others to make their final
payments. (Ingves, 2021, pp. 6-7)

According to Erik Thedeen, the head of the country’s financial authority, “it’s quite evident that
some form of regulation is needed.” Deputy Governor of Swedish central bank Per Jansson
showed concerns that Bitcoin and other cryptocurrencies will continue “fluctuate extremely,”
with “nothing concrete or substantial”. The financial markets minister of Sweden, Asa
Lindhagen, stated that standards for cryptocurrency exchange platforms have already tightened.
She also pointed out the importance of cross-border work at the international level to address the
issue of money laundering caused by cryptocurrencies (Rolander & Hoikkala, 2021). Indeed, as
Sweden is part of the European Union, the governance of cryptocurrencies in Sweden should be
done by taking into account positions of other EU members. It seems to be a challenging task,
according to the speech of Stefan Ingves.
The Riksbank is a part of the European System of Central Banks, ESCB, and covered by
EU legislation. As I see it, this cooperation will be made more difficult with a definition
of monetary policy that differs from what applies to the other central banks in the EU,
and even globally. And nor is it clear how the Riksbank and its Executive board should
manage questions where national legislation may be in conflict with EU legislation.
(Ingves, 2021, p. 25)

2.2.3 Public perceptions

Earlier it was mentioned that the governmental authorities tried to frame crypto
currencies as “investment tools” and “assets” which was reflected in the country’s legal policy.
However, it is questionable whether the imaginary created has affected the perceptions of local
citizens towards crypto currency industry. According to the paper by Grassman et al. (2021),

28
which looks at social media entries related to crypto currencies in Sweden to perform discourse
analyses based on them, the public’s associations with crypto currencies vary significantly.

… Sweden has a much higher relative usage of the words ‘Money’, ‘Bank’, ‘Crypto’,
‘Currency’ and ‘Value’. Looking more broadly at the rest of the data, both Sweden and
Japan have a similar relative usage of the word ‘Investment’. … The Swedish topics
highlight a strong focus on the main cryptocurrency, Bitcoin, but also the concepts of
money, utility, assets, and markets. Many of the main key words are well connected to
one another which suggests a strong link between topics. For example, ‘Valuta’
(currency), ‘pengar’ (money), ‘bank’, and ‘problem’ are all closely co-located with larger
circles, which suggests that many posts discuss problems with the banking and monetary
systems, perhaps exploring how cryptocurrencies may affect them. Other, less obvious
words such as ‘guld’ (gold), and land, can be interpreted as a reference to the utility of
cryptocurrencies, perhaps as an asset class or secure store of value. (pp. 181-184)

As the paper shows, crypto currencies have a strong association among local people with the
inefficiencies of the financial and banking systems. Therefore, citizens may consider crypto
currencies as an alternative to the contemporary monetary system, instead of simply expecting
crypto currencies to have a role of an investment instrument. Thus, it is reasonable to state that
“investment tool” imaginary in the case of Sweden has not performed its role well. Indeed, as the
paper by Grassman et al. shows that “the aggregated Swedish content seems on the whole to be
more open to Bitcoin having value not just as an investment like any other, but as a
form of money and alternative to banking matters” (p. 186). However, the other efforts of
Swedish authorities to frame crypto currencies as dangerous and risky seem to eventually affect
the population’s opinions. For example, the research by Grassman et al. points out to a case
when Bitcoin was mentioned as a political weapon.

… as another Swedish user expressed, about the role Bitcoin played in the funding
schemes of the Russian intelligence unit GRU, to weaponize data in the Facebook
disinformation campaign that purportedly interfered in the US 2016 election to get Trump
elected. (p. 187)

29
 Furthermore, social media users displayed concerns regarding electricity consumption of
Bitcoin such as “Bitcoin is such an inefficient way of storing transactions and it is
certainly not sustainable in the long run. …” (p. 186). Besides, there were some debates about
the founder of Bitcoin, Satoshi, who has not been noticed since Bitcoin was launched, discussing
accountability of the digital currency. The discussion on social media platforms revealed that
people consider decentralized nature of Bitcoin as an opposition to the centralized monetary
system. For example, one user expressed their opinion by stating that “… What Satoshi was
trying to counteract with Bitcoin, is the centralization of money via banks, and inflation,
which in fact has been a great success” (p. 188). The point was supported by the other person
seeing decentralization as an advantage. “It is much more peer-to-peer as a result, and
should instead be seen as a strength to credibility, rather than a weakness” (p. 188). Looking
to the public perceptions towards crypto currencies in Sweden, we see that the discussions on the
social media platforms show that attitudes towards crypto industry vary among users. While
some question their credibility, others show a great support their development. Despite the
efforts of the government to position them as assets, citizens mostly associated crypto currencies
as an opposition to centralized financial system as some users apparently expect that crypto
currencies will someday replace the contemporary monetary system with a non-centralized one.
It is difficult to analyze whether those expectations will construct the “reality” of the modern
monetary system as it may take another century to happen.

2.3 Comparison
Comparing two countries, political factors have significantly affected the development of
crypto industry in both countries. In the case of Kazakhstan president’s directions had a larger
impact on the industry, which can be explained by different political systems in Sweden and
Kazakhstan: the former is a parliamentary democracy, and the latter one has a presidential
system of government (Government Offices of Sweden, 2015; Official website of the President
of the Republic of Kazakhstan, n.d.). Furthermore, in both countries the governments were
relatively open to the crypto industry, expecting financial and non-financial (improving a
country’s image) from it. These expectations were based on assumptions that crypto industry will
generate profits and allow the countries to achieve technological advancement. However, as the
market prices of crypto currencies are highly volatile and there are still many debates on whether

30
crypto currencies are trustworthy or not, the reliability of those assumptions remains
questionable. Indeed, despite general openness, the risks and threats crypto currencies present
resulted in cautious attitude towards the crypto industry from the governments of Sweden and
Kazakhstan. Authorities of both countries responded to the illegal activities connected to crypto
currencies by imposing more regulations and creating imaginaries that have a negative message.
There is a clearer distinguishment between legal and illegal miners in Kazakhstan, where legal
miners are framed as “good” and illegal miners are presented as “bad”. In the case of Sweden
crypto miners are often discussed in general without a division to legal and illegal ones. The
main difference between the countries in their approach to crypto currencies is that public
expectations in Kazakhstan and Sweden differ significantly. Whereas in Kazakhstan crypto
mining plays a role of a substitute to the saving accounts in banks and mainly promises some
financial profits, in Sweden crypto currencies are considered as alternatives to modern monetary
system as Swedish citizens mainly emphasize their non-centralized nature. Furthermore, it is
seen that authorities of both Sweden and Kazakhstan aim to develop crypto industry in their
countries as they expect that crypto currencies will help in transforming those countries into
innovation hubs. It seen that both governments position and frame crypto currencies as a
technological advancement, even though such framing may occur unintentionally. Thus, an
imaginary created by the governments carries an association of crypto currencies with a
progressive technology. Such associations have already been discussed by Amelia Mutter
(2019), who notes that “… imaginaries are often connected with modernity through the notion of
a desirable future. Most often, what is conceived as desirable is also what is understood to be the
most modern and technologically advanced solution” (p. 7). She also adds that “… this
conception of modernity also fits with the notion of imaginaries in general, that they are seeking
to achieve something new and ideal” (p. 7). Nevertheless, in addition to highlighting potential
benefits of crypto currencies, authorities of both countries also acknowledged the threats they
present and warned their citizens to cautiously approach them. Thus, it is plausible that multiple
imaginaries can exist simultaneously. Indeed, the fact that more than one imaginaries can
interplay with each other was noted in paper by Mutter, which states that

By examining the case of public transport in Linköping, two competing imaginaries

emerge indicating contested understandings of the desirable future system. These two
visions of the future project different impressions on the preferable path to achieve a

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 fossil fuel free bus system. While, historically Linköping has been entrenched in a
sociotechnical imaginary which advocates for continued regional development of biogas,
another imaginary around electric buses has emerged on the national level. Each of these
imaginaries garner support for their own version of a sustainable future. (p. 8)

Besides, the case of crypto currencies shows that imaginaries can display both positive and
negative perspectives to an innovation. The plausibility that imaginaries can have both positive
and negative message was described also by Mutter, who notes that “… the imaginaries can be
reworked as a tool to highlight the negative aspects or the relative potential of the respective
imaginaries” (p. 6). Thus, both in Kazakhstan and Sweden, there exist multiple contesting
imaginaries.

3. ENVIRONMENTAL IMPACT
As it was discussed earlier, crypto mining consumes large amounts of energy, which
led to concerns regarding the environmental impact. For example, Mora et al. argue that “…
projected Bitcoin usage, should it follow the rate of adoption of other broadly adopted
technologies, could alone produce enough CO2 emissions to push warming above 2 °C within
less than three decades” (2018, p. 931). In contrast, Nic Carter from Castle Island Ventures
argues that such statements are based on “naive extrapolations of energy consumption to CO2
emissions” (Carter, 2020). Instead, he claims that crypto mining prevents waste of unused
energy. He also states that

The Bitcoin-energy supplicants are mum when it comes to the energy used to illuminate
Christmas lights, to power the data centers behind Netflix or to distribute untold millions
of single-serve meal kits. It’s clear that because Bitcoin’s footprint is so easy to quantify
— and an object of revulsion among the chattering classes — it is singled out for special
treatment. (Carter, 2020)

In order to look closer to the controversies around crypto mining and achieve a better
understanding whether crypto mining is sustainable or not, this chapter analyses such
environmental conflicts in the country-specific contexts of Sweden and Kazakhstan. Also, the
roles of expectations and imaginaries in determining the debates’ outcomes are examined.

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 3.1 Kazakhstan
While more attention in Kazakhstan is given to financial benefits of cryptocurrencies and
the deficit of electricity shortage resulted from the increased amounts of crypto mining,
environmental impacts of crypto mining should not be neglected as they significantly influence
the lives of citizens and the local nature. The issue is highly relevant for Kazakhstan particularly
because fossil fuels are the main source of electricity in Kazakhstan, which means crypto mining
significantly increases CO2 emissions.

The risk that increased energy consumption will result in higher carbon emissions occurs
because the more crypto currencies are mined, the more computers that work non-stop are
exploited. The more powerful processors they have, the faster is their speed in solving problems
and larger amounts of profits can be generated for their owners. However, that comes with the
price of increased energy consumption which leads to growing carbon footprint (Ismetova,
2020). For example, one of the largest crypto mines in Kazakhstan that belongs to a company
called Energix has equipment worth hundreds of dollars with 50000 computers located in the
territory of 15 hectares (BBC news, 2022). Computers located there consume six times more
electricity than normal computers as they solve complicated math problems required for mining
(BBC news, 2022). As it was noted by a local environmental activist, Timur Yeleussizov,
computers also get hot and require ventilators to cool them down (Ismetova, 2020). So, not only
computers themselves consume enormous amount of energy, but they also require additional
energy for their constant maintenance. Moreover, in his opinion, even when crypto miners in
Kazakhstan use renewable energy there is a negative impact to the country’ environment in the
face of water crisis risk affecting the country’s hydro system (Ismetova, 2020). Hydropower is
one of the most common alternative sources of energy in Kazakhstan (Perzadayeva & Ospangali,
2022). However, water basins in the country have been dwindled and the increased pressure on
hydropower plants because crypto mining may worsen the state of water sources (Ismetova,
2020). The rare example of a firm that uses renewable sourced of energy for crypto mining in
Kazakhstan is BigBlock Datacenter, a French blockchain calculation firm that invested in a
crypto mining near a dam and have used only renewable energy for crypto mining. However,
most of the crypto mines in the country are located in regions like Karaganda and Oskemen,
where coal and metals are extracted, and electricity is partially provided by coal power plants
(Ismetova, 2020). For instance, the crypto min that belongs to Energix is placed in near

33
Ekibastuz (BBC news, 2022). Ekibastuz is large coal-mining center in Kazakhstan, which
explains why that location was chosen (Britannica, n.d.). While there is no information regarding
sources of energy the mine uses, the location of the mine near Ekibastuz, gives a ground to
assume that the energy used is probably generated from coal. Nevertheless, the locals and the
environment of the regions have already been affected by the industrial works in areas of fossil
fuels’ and metals’ extraction even before to the emergence of crypto mines. Growing electricity
use in the industrial regions as a result of crypto mining and the following increase in use of
energy generated from coal can severely harm people and nature of that places even more. As it
was described by Alexandra Osipova, a local blogger, a city where she lives has in “an
aggressive environment” (Ismetova, 2020). From the perspective of Dana Ermolenok,
climatologist, the rapid growth of crypto mining in the country is ambiguous (BBC news, 2022).
She also raises concerns that while some individuals generate income, the negative consequences
of their actions are endured by mere citizens who inhale the air polluted because of the coal
usage. However, according to crypto mining community in Kazakhstan, the problem is more
overarching and related to the country’s energy sector rather than being connected to crypto
mining. Madi Saken, a senior coordinator in Kazakhstan’s Datacenter industry and blockchain
association, the matter that the country uses non-renewable sources to generate energy “is not a
problem of the [cryptocurrency] mining market, it is a problem of the energy infrastructure. In
that way you can criticize any business, which somehow uses energy” (Ismetova, 2020).
Moreover, according to Alan Dorjiyev, CO2 emissions from crypto mining are not as high as the
ones thrown out by factories and plants (Ismetova, 2020). He noted that “if we replaced all the
industries with the industry of data-centres, everything would, in effect, become cleaner”
(Ismetova, 2020). Also, from his perspective, crypto miners in in Oskemen helped the local
society by saving jobs during Covid-19 pandemics by purchasing electricity which had been
previously consumed by the metal plant in the region (Ismetova, 2020).

Looking to the examples provided above, there exists a conflict between local
environmentalists and members crypto community. The crypto miners claim that they should not
be accounted for the problems of Kazakhstan’s energy system and instead expect that they will
benefit the locals by providing job opportunities. Also, they argue that their activities are more
sustainable relative to other industries. The local activists, however, associate crypto mining with
the negative environmental effects caused by existing industries in the regions, and thus, expect

34
that crypto mining activities will worsen the ecological situation, which makes them more averse
towards the development of crypto mining in the country. The government’s position seems to
be somewhere in the middle. On the one hand, it wants to generate tax revenues for the country’s
budget through developing crypto industry in the country. On the other hand, the electricity
deficit brought the government’s attention to the environmental issues connected to the crypto
mining and made it take countermeasures against illegal mining activities. Nevertheless, the
picture we see is that while crypto community has a power to influence the government’s
decisions through the associations and by promising high profits, which are important for the
developing economy of Kazakhstan, the local environmentalists are often neglected by the state.
The reason for that can be explained by the fact that, even though the environmental activists
also promise ecological threats, the economy’s dependance on fossil fuels makes the government
to prioritizes financial profits over risks of increased carbon emissions.

2.7 Resources management issues and political factors

As it was mentioned earlier, the crypto related environmental issues also can be a part of
a larger problem of resource and land management. In the paper by Greenberg & Bugden (2019),
crypto mining areas described as energy consumption boomtowns were compared to extraction
boomtowns using the example of Chelan County in Washington (p. 162). Locals of Chelan
County and the government responded differently to the extractions of shale gas and crypto
mining activities. The reason is that shale gas was mainly associated with economic development
and jobs on rural areas (p. 163). As the authors explain citizen may anchor shale gas extraction to
other resource extraction and thus be more welcoming towards it, compared to crypto mining
activities that were new for the citizens (p. 166). Similarly, to the population of Chelan County,
Kazakhstan has already experienced metal and fossil fuels extraction. For example, the country
was on the 9th place for coal production (108 million tons) and on the 17th place for crude oil
production (91.9 million tons) worldwide in 2018 (International Energy Agency, 2021, p. 3).
However, in the case of Kazakhstan, it’s unclear if the citizens can anchor and associate crypto
mining activities to previous extraction activities as the public response to extraction has been
mixed. On the one hand, there have been certain to the population benefits associated with
extraction activities. In addition to the benefits to the country’s economy in the form of increase
in GDP and attraction of foreign investments, opening of branches in Kazakhstan by companies

35
like Shell and Chevron has created career opportunities for locals and developed infrastructure.
On the other hand, these benefits can be overshadowed by the huge cost in the form of the harm
to the environment and the health of citizens. The negative effects of extraction activities caused
some protests related to land management. For example, as it is described in the paper by
Dubuisson (2020), some protests connected to fossil fuels extractions in the country occurred
several times in Atyrau, west Kazakhstan, even though some activists have been punished in the
form of arrests and imprisonment. Oil extraction in Atyrau has severely damaged air, land, and
water of the region, even though the place has one of the highest environmental expenditures in
Kazakhstan. Moreover, international development and extraction resulted in struggles over
working rights of the locals and ecological concern, that also stimulated political activism. The
protests in Atyrau between 2016 and 2018, aimed to prevent the rental of lands to foreign
entities, were based on sovereignty and sacred geography discourses connected with cultural
history and traditional heritage of Kazakhstan (pp. 5-9). Indeed, the concept of land in Kazakh
culture is referred as something special and has a meaning of “birthland” and “homeland” in
Kazakh language (p. 4). Therefore, the protests opposing short-term (5–10 year) leases on public
lands to foreigners extraction activities gained mass popularity (p. 6). Besides, as the concept of
land and resource “protection” in Kazakhstan entwines different discourses of accountability,
many citizens were unwilling to let foreigners perform extraction activities without any control
while locals could not access such privilege (p.1). Eventually, as the protests scaled, the
authorities needed to react, so the government established a commission to organize public
discussions of the land reforms in several regions, including Atyrau. Also, due to the protests the
ex-president decided to delay the amendment of the land code (p. 7). The protests related to
extraction activities, thus, significantly affected the governmental policies.

Overall, based on the information above, promises and expectations from fossil fuels’
extractions and crypto mining are similar as both are connected to land management issues. We
see that both the mining and the extractions have promised more financial profits, more jobs, and
the development of infrastructure. In addition, threats, and risks both activities present for the
country are the same as both increase carbon emissions and imply negative health impacts.
Furthermore, by looking at the nature of the protests, we can notice that cultural positioning and
framing of land as “sacred” significantly affected the behavior of citizens. As crypto mining is
also related to land usage, the government, thus, may expect the same associations and reactions

36
towards crypto mining. The protests have played the role of a platform for dialog and discussion
of agency and authority in Kazakhstan and disclosed a political power that protests to influence
the government’s decision (Dubuisson, 2020, p. 2). Nevertheless, compared to the protests
related to the extraction activities, opposition to crypto mining in Kazakhstan has not achieved
such a large scale to shape the state’s policy, so in the case of crypto currencies, they can not be
used in the same way until more people will be against crypto mining, which is also connected to
the fact that crypto industry is relatively new.

The protests also show the importance of political factors for further development of
crypto mining in Kazakhstan, which was also shown earlier in the paper by showcasing that
several politicians were involved in illegal mining activities in the country. The way political
situation in the country has affected the crypto industry can be demonstrated by the recent mass
protests Kazakhstan experienced in January 2022 due to the rise of fuel prices. Although protests
were not directly connected to crypto mining, the consequences for miners were significant.
After the government switched off internet in the entire county to confront the riot, the industry
was in “knock out” for five days. As a result, the global net slowed down by 18 percent and
Bitcoin dropped in price (BBC news, 2022). The protests can significantly affect the future of
crypto mining in Kazakhstan by signaling miners to seek more politically stable environment and
push away investors, showing them the risks of crypto mining in Kazakhstan. If the miners and
investors expect that such situations will repeat in the future, they may decide to leave the
country to avoid future losses. Thus, it is important for the government to frame crypto mining in
the country as stable if they want to develop the industry further.

2.8 Future perspectives

As it was mentioned earlier, the GDP of Kazakhstan is significantly dependent on oil and
gas production. Currently coal remains the main source of electricity in the country. However,
the deficit of electricity resulted from crypto mining can also incentivize the development of
alternative energy sources in the country to ensure further development of the crypto mining
industry. As it was stated by the Vice Minister of Digital Development, Innovation and
Aerospace Industry of the Republic of Kazakhstan, “crypto mining industry in Kazakhstan now
mostly uses “dirty” energy, and the future development will only be possible in case of the
development of sustainable energy infrastructure” (BBC news, 2022). The need to shift to more

37
“greener” energy in Kazakhstan is also stated by a local environmental engineer, Roman
Chestnykh: “it is necessary to invest money in changes of the energy system, in
modernization: to make a transition to renewable sources or to finance gasification in regions”
(Ismetova, 2020). The additional reason to do so can be a global movement towards using
sustainable sources of energy, which affects preferences of international investors to crypto
mining. The example can be a statement of Elon Musk that Tesla will accept Bitcoins as
payment only when there would be an evidence that the energy used for its mining consist of at
least 50% “clean” energy (Cooban & Hamilton, 2021). Thus, if the crypto mining in Kazakhstan
develops usage of renewable sources of energy to attract investors and promote sustainability,
the industry has a potential to decrease the dependence of the country’s economy on fossil fuels
in the long term. The government’s willingness to overcome the dependance on fossil fuels also
can be shown by the fact that the high-level leadership of Kazakhstan actively pursued green
investments collaborating with the European Bank for Reconstruction and Development (EBRD)
to support energy sustainability (Dubuisson, 2020, p. 3). Moreover, the president proposed to use
nuclear and hydroelectric energy as main sources of energy instead of coal and gas in September
2022 to achieve net-zero emissions by 2060 (Kozhanova, 2021). He highlighted that Kazakhstan
needs a nuclear power station and instructed to research the matter of nuclear energy in
Kazakhstan (Radio Azattyq, 2021). Nevertheless, since the share of renewable energy in
electricity generation in Kazakhstan was only 10.4% in 2018, the further development of
electricity sector based on renewable sources of energy will probably take several years
(International Energy Agency, 2020). The issue is that Kazakhstan has already faced the deficit
of electricity. In order to meet the increased demand for electricity coming from crypto miners in
a short period larger amounts of non-renewable sources as coal can be used to generate energy.
That will increase carbon footprint and have a detrimental impact on health of locals and the
environment that have already been suffering from the industrial works. Moreover, even in case
of using sustainable sources, there is still a risk to the local people and the environment like
damage to the country’s water system in the case of hydropower usage. For example, nuclear
power remains controversial for some people due to having risks of explosion. Furthermore, as it
was mentioned by Bagdat Musin, electricity consumed for mining could be used for other
purposes (Salinger, 2021). Thus, even when only renewable sources are used to generate
electricity, it is still unclear whether crypto mining can be sustainable. Therefore, expectations

38
related to crypto mining in Kazakhstan have a potential to for a “greener” future for the energy
sector of Kazakhstan, but it is only plausible in the long run if the authorities decide and expect
that such shifts will benefit the country by attracting more investments.

3.2 Sweden
As it was mentioned in the preceding chapter, similarly to Kazakhstan, one of the reasons
why Sweden has attracted crypto miners is abundance of electricity. In contrast to Kazakhstan, the
country mostly uses renewable sources of energy as it possesses three nuclear facilities with ten
reactors overall, and almost 2000 hydropower plants. That makes the energy generated in Sweden
more sustainable in relation to Kazakhstan which mostly uses one generated from non-renewable
sources. Also, the government of Sweden stimulates business to exploit sustainable energy,
particularly wind and solar one, through decreasing tax by 98 percent for such electricity
companies. In addition, Sweden has had cheaper electricity prices, compared to other countries in
Europe. All that factors, in addition to a strong economy and favorable climate, became a reason
why a lot of crypto mining companies has chosen Sweden for crypto mining (Smile-Expo, 2018).
For example, Canadian company HIVE Blockchain started mining a crypto currency called
Ethereum in Sweden in January 2018 and was expanding energy capacity for its crypto mine in
Sweden up to 17.4 megawatts. As it was said by the firm’s co-founder, Olivier Roussy Newton,
“We’re on a global hunt to secure as much power as we can,” showing the importance of having
an electricity in crypto mining for crypto mining companies (Steitz & Jewkes, 2018).

3.2.1 Ban on crypto mining: debates

The development of crypto industry in Sweden raised concerns among the governmental
authorities that crypto mining will prevent the country from achieving the conditions of Paris
Agreement and present threat to the society. For example, Director of Swedish Financial
Supervisory Authority, Erik Thedéen, and Director of Swedish Environmental Protection Agency,
Björn Risinger in their open statement addressed to the EU questioned the benefits of
cryptocurrencies and outlined the risks they bring to the society and the environment (Thedéen &
Risinger, 2021).

The social benefit of crypto - assets is questionable. … The consumer risks are significant,
and crypto - assets are commonly used for criminal purposes such as money laundering,

39
 terrorist financing and ransomware payments. Crypto - assets also have a significant
negative impact on the climate as mining leads to both large emissions of greenhouse
gases and threatens the climate transition that needs to happen urgently. (Thedéen &
Risinger, 2021)

Erik Thedéen and Björn Risinger noted that crypto mining consumes incredibly large amounts of
electricity, which is non-efficient way of exploiting limited energy.

… it is currently possible to drive a mid-size electric car 1.8 million kilometres using the
same energy it takes to mine one single bitcoin. This is the equivalent of forty-four laps
around the globe. 900 bitcoins are mined every day. This is not a reasonable use of our
renewable energy. (Thedéen & Risinger, 2021)

The regulators emphasized that the growing popularity of crypto mining also increased electricity
demand in the country. “Between April and August this year, electricity consumption for Bitcoin
mining in Sweden increased by several hundred per cent and now amounts to 1 TWh annually.
That is equal to the electricity of 200,000 Swedish households” (Thedéen & Risinger, 2021) In
order to mitigate the environmental risks and achieve the conditions of the Paris Climate
Agreement, they suggested to ban energy-extensive mining. They explained that such a large
amount of renewable energy instead can be used for other industrial and domestic purposes in
Sweden.

If we were to allow extensive mining of crypto - assets in Sweden, there is a risk that the
renewable energy available to us will be insufficient to cover the required climate
transition that we need to make. This energy is urgently required for the development of
fossil-free steel, large-scale battery manufacturing and the electrification of our transport
sector. (Thedéen & Risinger, 2021)

The authorities highlighted that it is Proof-of-Work mining method that creates the electricity
issue. PoW requires larger amounts of energy and thus less sustainable than other types of crypto
mining. It is widely used to mine cryptocurrencies including Bitcoin and Ethereum, which are
the most popular ones in the world. Erik Thedéen and Björn Risinger stated that “… the two
largest crypto-assets, Bitcoin and Ethereum, together use around twice as much electricity in one

40
year as the whole of Sweden. Crypto-production's high energy consumption is due to its mining
process, which is called proof of work” (Thedéen & Risinger, 2021). They explained that
imposing a ban on Proof-of-Work mining within the EU will promote more efficient energy
usage in the industry and that “It would also mean that our renewable energy is used as
efficiently as possible in order to support the transition towards climate neutrality” (Thedéen &
Risinger, 2021). Thus, in their open statement to the EU they proposed “an EU-level ban on the
energy-intensive mining method proof of work” to “halt the continued establishment of crypto-
mining production using energy-intensive methods” (Thedéen & Risinger, 2021). In addition to
that they brought attention to misleading framings of crypto mining businesses as sustainable
ones by stating “That companies who trade and invest in crypto-assets, that were mined using the
proof of work method, cannot be allowed to describe or market themselves or their activities as
sustainable” (Thedéen & Risinger, 2021) Erik Thedéen, who is also vice-chair of the European
Securities and Markets Authority (EMSA), also explained that he was not requiring total ban on
cryptocurrencies, and instead wanted to encourage a "discussion about shifting the industry to a
more efficient technology" (Bateman, 2022). He said that "The solution is to ban proof of work,"
and that it may worth it to explore a move to the Proof-of-State method (Bateman, 2022). He
also stated that “Bitcoin is now a national issue for Sweden because of the amount of renewable
energy devoted to mining. It would be an irony if the wind power generated on Sweden’s long
coastline would be devoted to Bitcoin mining” (Patrick, 2022). Overall, by looking at the
statements of the governmental authorities, it is seen that, even though they suggest banning only
the Proof-of-Work mining, their statements often frame crypto mining in general as a risky
activity associating it with inefficient energy consumption and criminal activities such as money
laundering.

The idea to ban crypto mining received huge criticism from the industry players
(Nambiampurath, 2022). Patrick Hansen from Berlin-based start-up called “Unstoppable
Finance” posted on his Twitter account that “Its such a suicidal proposition it is hard to digest. It
would kill the entire European crypto industry, the one sector that fully aligns with the European
values and where the EU could actually be competitive” (Hansen, 2022). In addition, Darin
Feinstein of US-based “Core Scientific” commented the ban on crypto mining on his Twitter
webpage by outlining its drawbacks “As mentioned before, I totally agree … that the
implementation of this article would kill the competitiveness of EU crypto businesses and drive

41
plenty of capital, talent, and companies out of the EU (Feinstein, 2022). Eric Wall, chief
investment officer (CIO) at Arcane Assets, also posted on his social media account that even the
Swedish electricity company is against the ban “Lol, @Vattenfall_Se, Sweden’s own *state-
owned* power company (Sweden’s absolutely largest fossil-free energy producer) just
completely rejected the notion—put forth by our financial regulator and environmental
protection agency 2 days ago—of bitcoin mining’s wastefulness” (Erica, 2021). Indeed, from the
perspective of Vattenfall, the mining has the potential to solve some issues of the industry.
According to Henrik Juhlin, the company’s head of Physical Power Management can be used to
balance the pressure on electricity grids, especially when there are of the power supply is volatile
(Vold, 2021a). This is important for Sweden because the country’s energy system is dependent
on wind and solar energy sources. As it was said by Juhlin “[The crypto miners] can both reduce
and increase their consumption [of energy]. It can work as a buffer, so to speak, for the
production of energy” (Vold, 2021a). He explained that crypto miners can help manage load of
the grid by using electricity in times when there is a surplus and turning off the computers in the
case of deficit. Furthermore, the representative of Vattenfall noted that a crypto ban can have a
negative effect on the environment and rise CO2 emissions even more if the ban can force crypto
miners to move to countries with greater dependance on energy generated from fossil fuels
instead of renewable sources. Therefore, we can see that statements made by the industry players
and the electricity company contradict the negative imaginaries created by the regulators and
frame cryptocurrencies in a positive way by outlining its benefits and importance instead and
displaying their expectations that the ban will “kill” the industry within the EU.

3.3 Comparison
To summarize the findings of this chapter, in the case of Sweden, debates about
environmental impacts of crypto mining are not directly related to CO2 emissions as the country
mainly uses renewable sources of energy to generate electricity. In contrast, Kazakhstan’s
electricity system is mostly based on energy generated by fossil fuels, so there the main issue
concerning environmentalists is the risks crypto mining has for people’ health and nature due to
higher carbon emissions. Moreover, in Kazakhstan the conflicts are connected to land
management issues that have already existed in the country even before the emergence of crypto
mining. The main issue in the case of Sweden is the limitations to the availability of renewable

42
energy and efficient allocation of it. There different parties argue whether it is correct to use such
large amount of energy for crypto mining as it limits its usage for other purpose. Such
discussions are also parts of global debates on sustainability of crypto mining. As one of the
questions asked on such debates is whether energy, both renewable and non-renewable, should
be spent on crypto mining, we can thus state that it is a problem of energy management. In other
words, the main question faced by arguing parties can be in whether crypto mining should be
prioritized over other things when deciding how to allocate limited amounts of energy.
Furthermore, this paper demonstrates that crypto mining in Kazakhstan has a potential to shift
energy sector towards greater usage of renewable energy sources by promising more investment
opportunities, which is not the case in Sweden as the country mostly uses renewable energy
already. Finally, it is important to note that crypto mining can potentially influence energy prices
by affecting the electricity demand. The mass protests in Kazakhstan showed that a rise in energy
prices then can cause public outrage. Thus, this paper shows that crypto mining can (indirectly)
affect political situation in a country. However, as the protests eventually resulted in Internet
shortcuts and the drop in Bitcoin’s hash rate, we can see political factors also have a significant
impact on crypto industry.

4. DISCUSSION
After looking at the conflicts between the governments and the miners, and the
environmental implications of crypto mining separately in the previous parts of the thesis, this
chapter discusses the main findings and analyzes the key aspects simultaneously. Firstly, the
evidence provided above shows that framings of both crypto currencies and crypto mining have a
controversial nature. For example, crypto mining depending on a situation can be positioned as
“sustainable” or “unsustainable”, even when only renewable sources of energy are used as in the
case of Sweden. Also, there are more than one “frame” that often oppose each other. In addition
to “sustainable” or “unsustainable”, there are “investment tool” vs “means of payment”,
“technology of the future” and “profitable business” vs “risky and dangerous activity”. Usually,
the main debate takes place between industry players supporting crypto-related activities and
governmental authorities outlining the risks they bring. However, even within a single
government there have been contradicting “frames” reflected in policies opposing each other.

43
Also, as different authorities frame crypto currencies and the mining differently, the imaginaries
created within a single country also contradicted each other.

Comparing expectations in Kazakhstan and Sweden, the main motivation for crypto
miners in both countries is to generate profits. Cheap energy and relative openness of the
governments to the crypto industry were the main reasons why those countries were chosen by
the miners initially. From the perspective of governmental authorities of both countries, there
have been expectations that crypto mining and crypto industry in general can help transform the
countries to innovation hubs by promoting the image of the countries and generate profits
through foreign investments and taxes. Although, the described expectations were present in both
states, there seems to be more emphasis on generating profits in Kazakhstan, in comparison with
Sweden. The most plausible explanation is that whilst Kazakhstan’s economy is still in the phase
of development, compared to well-established economy of Sweden, it needs more foreign
investment to develop further, which can motivate the country’s authorities to prioritize profits.
Furthermore, the paper shows that the expectations in both cases have affected the crypto-related
regulations. For example, only if the governments expected that crypto mining has a potential to
generate profits, they would impose a tax on it. Looking at the impact of expectations on the
development of the crypto mining and crypto industry, it can be seen clearly that expectations in
both cases have formed the “reality” and affected the future of crypto industry in the Sweden and
Kazakhstan. For example, when governmental authorities of Kazakhstan have recognized and
started to expect that the industry has a potential to generate tax revenues for the country, they
started to promote the industry by creating the necessary legal framework. In contrast, when
they expected that further increase of crypto mining activities will worsen the electricity deficit
in the country, they framed the deficit as the result of the illegal mining activities. Similarly,
Swedish government’ expectations that crypto currencies will help the country to become a
digital currency innovation, they encouraged the development of the industry. However, when
the authorities started to expect more money-laundering cases and recognized (expected) a threat
of crypto mining to comply with the conditions of the Paris Agreement, they framed the mining
as dangerous and suggested to ban it. Thus, we can see that expectations have also affected the
imaginaries created by the government in the case of crypto currencies. While the positive
expectations from the crypto industry led to positive imaginaries as “technology of the future”,
negative expectations resulted in governments positioning and framing of cryptocurrencies and

44
crypto mining as unsustainable and dangerous, generating negative imaginaries. Besides, how
crypto mining was framed can also affect the expectations. For example, by positioning crypto
currencies as “investment tools” in the regulations, authorities ensured that the mass population
considers them as such. However, the imaginaries haven’t always worked as planned by the
government. For example, as this paper shows, people in Sweden have still associated crypto
currencies with non-centralization.

By looking at the different power groups in Kazakhstan and Sweden, this paper also
reveals that both countries have the conflict of interests between the crypto community and the
governmental authorities. However, the positions of the countries’ electricity companies were
different from each other. While in the case of Kazakhstan, KEGOC accused miners for the
high-pressure on the electricity grids, Sweden’s Vattenfall was supporting crypto miners that
were against the ban. That can be explained by different motivations that the companies have
had. Whereas Vattenfall is interested in generating profits by selling electricity to miners, that
otherwise will be wasted, KEGOC had an intention to hide the inefficiencies in the energy
system, and thus was supporting limitation of crypto mining in the country as there is already a
deficit of electricity in Kazakhstan. Indeed, according to the paper by Mutter (2019), “This
imaginary [electricity imaginary in Sweden] is also supported by what can best be described as
electricity interest groups. This group includes diverse electric interests including electricity
providers and infrastructure companies for example E.ON, Vattenfall, and ASEA(ABB)” (p. 6).
That demonstrates that Vattenfall’s support of crypto mining activities can result from
company’s interest, for example to sell more electricity, rather than represent an objective
judgement. The same applies to the statements provided by members of the crypto communities
and governmental authorities of Sweden and Kazakhstan. As each party follows their interests,
they can be biased in their comments related to crypto industry, which also affects how crypto
mining is framed to the general mass. Thus, it is possible to assume that some imaginaries
created by authorities can be biases too, even when there was no such intention.

This paper also shows that in Sweden, compared to Kazakhstan, social media platforms
have larger impact on the crypto industry. For example, they played an important role in
determining public perceptions of crypto mining. According to Grassman, in the case of Sweden
“It [social media posts] could have, as others do, raised concerns about cryptocurrencies

45
facilitating dealings in narcotics, other illicit goods, money laundering or terrorism” (p. 187).
Besides, the passive reaction of Instagram representatives to the issue of money laundering in the
country reveals a power conflict between the Swedish authorities and the social media platform.

5. CONCLUSION
This research paper analyses the development of crypto mining in Kazakhstan and
Sweden to reveal social and environmental implications of the innovation in both countries and
compare them. In order to answer the main research question, which is how expectations and
imaginaries about crypto mining are formed and contested in Sweden and Kazakhstan, the paper
firstly looks at the power conflicts between crypto miners and the government. The research
reveals that in Kazakhstan crypto mining community holds more power as its members are
united in the associations. The thesis shows that in both countries the governments’ and the
miners’ expectations to generate profits and achieve technological advancement have been main
driving force for the development of the industry, and thus constructed the future of the industry.
However, the opposite was also revealed as the actions of both parties in Kazakhstan and
Sweden have been affected by the changes in the market. For example, in the case of Sweden, as
there were multiple fraudulent activities associated with crypto currencies occurring in the
country, the government needed to impose stricter regulations to prevent them. Furthermore,
comparing how crypto miners and the governments of both countries positioned and framed
crypto currencies, the paper discloses that while the framings of the governments vary depending
on situation and can have both positive and negative nature, the miners usually presented crypto
mining in positive way outlining the benefits it brings. Moreover, the paper demonstrated how
miners and the rest of population have been affected by imaginaries that the government created.
For example, framing and positioning of crypto currencies as investment instruments in the
regulations forced the locals to adapt to such laws. Thus, we can state that imaginaries created by
the governments affected the expectations of the industry players. The example also showcases
that in general the governments have had to affect the industry through legal instruments as
taxes, evading which results in severe punishments for citizens.

After defining the power groups and their impact on crypto mining industry both in
Sweden and Kazakhstan in chapter 2, the paper analyses the environmental impact of crypto
mining in both countries. The thesis reveals that environmental risks are higher in Kazakhstan as

46
its electricity system leads to higher carbon emission of crypto mining activities, compared to the
case of Sweden, which was explained by greater dependance of the former on fossil fuels.
Nevertheless, measures taken by the government of Sweden to mitigate environmental risks are
more severe compared to those in Kazakhstan. While the environmental issues are discussed and
contested in both countries, it seems that the government of Kazakhstan is more ignorant to such
risks. It may be explained by the fact that authorities of Kazakhstan value expected profits more
compared to the authorities of Sweden due to weaker economic system of the former.
Furthermore, Kazakhstan has relatively long extraction history, which can also affect the
expectation of the county’s government by creating associations with profits generated from
fossil fuels, for example. In contrast, Sweden does not have such a rich history of extraction as
Kazakhstan does. Therefore, politicians there are more cautions of the environmental risks crypto
mining presents, which can influence their framings of it. Thus, more negative imaginaries
outlining threats of crypto mining can be developed. The preceding, thus shows complicated
nature of interrelations between imaginaries and expectations.

It is also important to note that the conflicts shown above are part of larger debates on the
world level. There is no clear answer yet whether crypto mining is sustainable or not. Also, as
recently the prices of cryptocurrencies dropped sharply, the future of the whole industry remains
uncertain. Besides, the governments worldwide still in the process of regulating the market,
which also affects the development of the mining industry. Overall, the cases of Kazakhstan and
Sweden present that the future of crypto mining, and crypto industry in general, is significantly
dependent on the expectations and imaginaries about it. By analyzing imaginaries created by the
governments of Sweden and Kazakhstan, the thesis paper shows that in both cases they had a
controversial nature and were framed differently depending on a situation. In both countries,
imaginaries and expectations about crypto mining interplayed with each other, affecting how
society perceives the innovation. Furthermore, social and environmental factors also affected
how expectations and imaginaries are formed as events happening in the market have shaped the
expectations of both the industry players and the governments, which also affected how they
position it. Therefore, the thesis concludes that while it is true that expectations and imaginaries
determine the future for crypto mining, the opposite is also true.

47
 6. FUTURE STEPS
It should be taken into account that the author of this paper possesses knowledge of the
local language of Kazakhstan, which is not the case for Sweden. Thus, more specific research on
Sweden with the use of sources in Swedish language will deepen the understanding of the
research topic. Also, as crypto currencies are still emerging as new technology, the governments
have not completed the process of regulating the industry. In order to develop the research
further, it is important to scrutiny larger time frame to see the impact of regulations in the long
run, which is only possible after some time will pass in the future. Next, it is important to look at
the financial side of the debates by looking at the market prices of popular crypto currencies like
Bitcoin and Ethereum, which can help define motivations and expectations of the industry’s
stakeholders more clearly providing the amount of potential financial profits the market
participants can gain.

48
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