Kadykchan was built by gulag prisoners during World War II for the purposes of coal extraction. Later it accommodated miners at two local coal mines[5] which supplied Arkagalinskaya electric power station. The depth of mines was about 400 meters (1,300 ft).
After the dissolution of the Soviet Union, coal mining in the area became increasingly unprofitable. One mine closed in 1992, and an explosion at the other in 1996 which killed six people led to a decision to close it also and for the government to subsidize residents to move elsewhere.[5] Major buildings were blown up.[5] As of 2010, the settlement was officially completely depopulated.[4]
Магаданская областная Дума. Закон №1292-ОЗ от 9 июня 2010 г. «Об административно-территориальном устройстве Магаданской области», в ред. Закона №1756-ОЗ от 9 июня 2014 г. «О внесении изменений в Закон Магаданской области "Об административно-территориальном устройстве Магаданской области"». Вступил в силу через 10 дней после дня официального опубликования. Опубликован: Приложение к газете "Магаданская правда", №63(20183), 16 июня 2010 г. (Magadan Oblast Duma. Law #1292-OZ of June 9, 2010 On the Administrative-Territorial Structure of Magadan Oblast, as amended by the Law #1756-OZ of June 9, 2014 On Amending the Law of Magadan Oblast "On the Administrative-Territorial Structure of Magadan Oblast". Effective as of the day which is 10 days after the official publication date.).