Crypto mining, fintechs and start-ups

Kazakhstan accounts for 13% of global bitcoin mining, a technology that primarily uses energy from fossil fuels.

Thomas Osborne
Thomas Osborne
23 October 2022 Sunday 02:45
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Crypto mining, fintechs and start-ups

Kazakhstan accounts for 13% of global bitcoin mining, a technology that primarily uses energy from fossil fuels. It is one of the paradoxes of the country, since a good part of its wealth – that of the foreign exchange that allows it to import technology and capital goods and obtain the resources to bet on renewable sources – comes from oil and gas, the energy sources dirtier.

Daniyar Mubarakov, president of the Association of Blockchain and Big Data Industry in Kazakhstan, defends himself on the grounds that crypto mining brings tax revenue and much more. "The cable products we use, as well as the transformers, frames, fans, industrial filters and switches, are purchased from local factories," he tells this newspaper. And he adds: "New jobs have been created, with competitive salaries, to hire programmers, energy workers, engineers and electricians, among others."

Blockchain technology is a key tool in the digitization advocated by the Government for all administrative and fiscal management and in what it intends to be the relationship with citizens and companies. Bagdat Musin, Minister of Digital Development, Innovation and the Aerospace Industry, estimates that the country's GDP can be boosted in the medium term by between 30% and 40% thanks to digital transformation. “We lead the world in this area, behind Estonia and alongside other countries where paperless administration is a top priority,” says Musin.

Although economic development is still incipient in many sectors, many leading companies are already incorporating technology into their processes and the number continues to grow. Digitization and integration with blockchain technology is especially intense in the business operations of the banking industry. “By integrating the blockchain into banks, consumers can see their transactions being processed in as little as ten minutes, essentially the time it takes to add a blockchain, regardless of holidays, time of day or season. week, as well as lower fees,” explains Tamerlan Absalyamov, an analyst at Freedom Finance Global. According to this expert, with blockchain, banks also have the ability to exchange funds between institutions much faster and more securely.

Fintechs are the spearhead of a modernization that now seeks to make its way into the brand new Astana Hub building. The building and, above all, the current commercial policies are the closest thing to a huge runway ready to attract capital. Nothing is missing, from the initial welcome and reception to the expatriate services center, personal and business tax incentives, access to funds for the initial stages and the network of contacts to attract capital. In just four years of operation, the technology center has had the participation of 900 companies, of which 160 are foreign, with some 12,000 employees.

But not everything is rosy. As happens in the world of innovation, many companies fall by the wayside and, in the case of Kazakhstan, this is partly because when it comes time to really invest – beyond the initial push – everything it gets complicated. “We lack depth in the financial market, and that means we suffer from a lack of venture capital fund managers in the country,” warns Magzhan Madiev, founder and CEO of the Astana Hub and co-founder and partner of Naimi. kz, a search website for services of all kinds that is growing a lot in Kazakhstan. “For a start-up, getting a million dollars can be easy, as we have seen, but beyond that amount, entrepreneurs have nowhere else to turn,” he laments.

There are no unicorns yet, nor are they expected anytime soon. During a visit to the center, its managers proudly show the different companies that are in its facilities. In the top-10 of the financing operations of the last two years there is no large disbursement. Neither medium nor small, by western standards. The largest on the list of honor is Jet, a shared motorcycle company with 10,000 units scattered throughout 14 cities in the country and that has just raised... three million dollars! But everything is starting. In 2021, all investments in start-ups in the country received an investment of 200 million dollars. But there is hope: the hub has a company that has been valued at $100 million.