Mining Prospects in Kyrgyzstan and Life in the Metaverse: How the First Blockchain Forum in Bishkek Went

May 16, 2022
6 min read

“Digital Literacy 3.0” - the first blockchain forum to ever be held in Bishkek - happened on the 23rd of April, and focused on developing the technology and integrating it into everyday life as well as the business environment. Representatives of both government agencies and the creative blockchain industry as well as entrepreneurs, investors, and IT specialists came together to discuss the development prospect and the future of mining in Kyrgyzstan. The forum was organized by the business club “Entrepreneur” and the country’s Ministry of Digital Development.

CBDO of EMCD Vyacheslav Nekrasov spoke about the possibilities for the development of mining in the Kyrgyz Republic. He expressed the opinion that there is huge potential for the country in terms of the development of the mining industry. In his words, renewable energy and the country’s natural resources are what provide these opportunities.

According to UN data as well as from the Ministry of Energy of Kyrgyzstan, the republic currently only uses about 1.5% of the total potential power of small hydropower plants. Which leaves a huge amount of water resources available to be used for mining.

Nekrasov noted that in order to develop the industry, they need investors who are interested in the construction of hydroelectric power stations to come to the country, but there has been some difficulty in this. Due to low taxes set for the population, returns on construction are not seen immediately, but are stretched out over a number of years.

However, mining would allow investors to invest in projects that initially may have seemed unattractive to them. The fact is, in Kyrgyzstan there are regions where there is a shortage of electricity.

“It is difficult to underestimate the possible social effect that the same 20-30 MW hydroelectric power station could have in these regions. Small hydroelectric power plants will allow investors to receive income not only from mining, but also from the plants themselves as they will deliver electricity to those places that are especially in need, such as mountain towns and settlements.” Nekrasov explained.

To illustrate his point, Nekrasov gave the example of the construction of a small 20MW hydroelectric power station. According to him, the payback and return on investment of that kind of entity would be accomplished with the data centers that provide cryptocurrency mining and mining infrastructure.

He noted that a mining farm run on that type of hydroelectric power station almost halved the amount of time to see return on investment. On average, seeing a return on investment takes 5 years, but with mining, the duration is reduced to 3.5 years.

Denis Smirnov, EMCD Liquidity Manager, also made a presentation on the development and applications of the DeFi system.

According to him, the credibility of the centralized financial system is undermined due to its lack of transparency and its inaccessibility to some regions of the world. But the blockchain offers a different solution - eliminate intermediaries and instead, replace them with cryptography and mathematics that cannot be tricked.

This is what is called the DeFi industry, whose goal is to build an open, transparent, and practically free ecosystem of financial services. Smirnov noted that the capitalization of DeFi projects is growing faster than the capitalization of the crypto market as a whole. In just a year, the volume of assets locked in the ecosystem has increased to $200 billion from $1 billion, and is continuing to grow.

He also identified several possible growth areas for the ecosystem:

  1. State recognition and regulation
  2. Public administration
  3. NFT
  4. Smart contracts or decentralized applications
  5. Metaverse and GameFi
  6. Cryptocurrencies

Blockchain, by its very nature, is the key to a new evolutionary stage in the development of the Internet - the so-called Web 3.0 - where the “Internet of reading and creating” will also become the “Internet of ownership”. At this stage, the user will be able to decide for themself what information the websites they use will receive.

Smirnov dwelled separately on NFT technology. According to him, people used to think that the original was indistinguishable from the copy. NFTs bring this property back to the digital world, allowing you to identify the unique original among any number of copies. This opens up opportunities for the tokenization of both digital as well as real assets, completely changing the intellectual property licensing market, the media market, the gaming industry, and the contemporary art market.

For example, the play-to-earn industry is already actively developing and thanks to it, a player could sell resources earned in the game to other players for real money. Today, P2E games account for 45% of the traffic of all decentralized applications. Based on this industry, a new form of business has emerged: gaming guilds. Such companies rent out NFT tokens to users in exchange for a portion of their income, allowing some people to earn passive income and others to earn from their game activity.

Metaverses are also built on the principle of decentralization - they give users the opportunity to own not just a piece of content, but also create, manage, and earn their own assets. Smirnov expressed confidence that over time, disparate virtual worlds will be transformed into a global metaverse in which it will be possible to exchange assets without restrictions.

Even the mining industry is undergoing changes, creating entire global ecosystems. Previously, mining was a sure way to earn money, but now cryptocurrency can be used to buy new digital assets, to get insurance that protects against falls in the exchange rates of assets, and as collateral for decentralized loans.