Authorities in Al-Wafrah, Kuwait, cracked down on alleged crypto miners in the city, which resulted in a 55% decrease in power consumption the following week. According to Reuters, Kuwait is in a power crisis as summer temperatures are soaring. Its growing number of citizens are pushing the power grid to keep cool while some power plants are experiencing maintenance delays. Kuwaiti authorities allege that cryptocurrency miners are pushing power demand beyond the country's capacity, leading to blackouts and a "major" power crisis.
Cryptocurrency trading is illegal in Kuwait, but mining is not explicitly banned. Nevertheless, the government's interior ministry said it "constitutes an unlawful exploitation of electrical power…and may cause outages affecting residential, commercial, and service areas, posing a direct threat to public safety." The government raid covered about 100 homes suspected of hosting crypto mining operations, with some using more than 20 times the electricity consumption of the average Kuwaiti home.
Crypto mining is a power-intensive activity, with one Bitcoin transaction consuming more than 1,047 kWh of electricity — about the same amount of power that the average U.S. household uses in over a month. Researchers estimated that Kuwaiti miners were responsible for less than half a percent of global mining activities in 2022. However, Digiconomist founder Alex de Vries-Gao told Reuters, "It only takes a very small share of the total bitcoin mining network to have a significant impact on the relatively small total electricity consumption of Kuwait."
Kuwait is a small, oil-rich country in the Middle East, where electricity is affordable, probably because of its low fuel costs. Because of this, it's become an attractive area for crypto miners, as power consumption is one of the biggest costs of their operation. However, Kuwait's limited power reserves and expanding urban area mean these operations compete against residents and other businesses for electricity. Given that the authorities ban cryptocurrency trading, it makes sense for them to also crack down on mining operations.
This incident highlights the increasing power demands of high-powered computing. And while crypto mining might be setting records in power consumption, AI data centers are the bigger threat to our electricity supply. Meta founder Mark Zuckerberg says that limitations in our power grid will constrain AI growth, with Meta and other companies turning to nuclear reactors to provide the electricity their massive data centers need. And even if there's enough power to be had, they also cause reduced power quality in nearby residential areas, reducing the lifespan of electrical appliances in our homes.
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