Crypto Miners Pay $7 Million In Taxes In Kazakhstan In Uncertain Future For Industry CryptoGlobe

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The government of Kazakhstan has collected over $7 million in taxes this year and last from businesses operating cryptocurrencies in the country. The news comes amid mounting regulatory pressure that is limiting industry’s access to low-cost energy while increasing its tax burden.

Miners face higher expenses and more challenges under new legislation

Kazakhstan’s coffers received 3.07 billion tenge (nearly $6.9 million) in tax payments from entities involved in minting digital currencies in 2022, the State Revenue Committee has announced. Ministry of Finance, quoted by local media and crypto outlet Forklog.

Cryptocurrency miners in the Central Asian nation have been required to pay taxes and fees since January 1 last year. In 2023, they have already transferred 240 million tenge (almost $540,000) to the budget, by April 27. All payments due for the first quarter must be made by May 25, the finance ministry said.

On February 6 this year, President Kassym-Jomart Tokayev signed the new law on digital assets in the Republic of Kazakhstan, some provisions of which have not yet entered into force. It regulates crypto-related activities, such as mining, and comes with amendments to the tax code. Most notably, the legislation restricts miners’ access to cheap electricity after being accused of power shortages.

According to Sergey Putra, senior government relations coordinator at the National Association of Blockchain and Data Center Industry in Kazakhstan, the adoption of the law demonstrates Kazakhstan’s interest in the development of the blockchain industry. cryptography in general. At the same time, a number of issues, related to other laws or regulations, remain relevant, he noted, commenting for Bitcoin.com News on the effects of the legislative changes for the sector.

Kazakhstan crypto miners cut off from subsidized electricity

Miners in Kazakhstan have been disconnected from local power sources for more than a year, even amid surpluses from power-producing companies, Putra said. An additional tax on electricity consumed excludes the possibility for miners to seek out low-cost sources of electricity. The fee is differentiated and increases the cost per kilowatt hour, explained the representative of the professional organization.

Sergey Putra also pointed out that implementing laws through regulations is extremely difficult and does not go in the direction of supporting miners and the crypto industry as a whole. He expressed the hope that these are temporary problems and their solution would bring a new period of development for bitcoin mining in the country.

Kazakhstan became a crypto-mining hotspot when China clamped down on the sector in the spring of 2021. Luring miners with subsidized electricity, it ranked third in average global monthly hashrate in January 2022, according to data provided by the Cambridge Center for Alternative Finance. However, according to Norwegian industry analyst Jaran Mellerud, Kazakhstan’s share fell from a peak of 18% in October 2021 to just 4% in May 2023.

Keywords in this story Bitcoin, Bitcoin mining, Crypto, crypto miners, crypto mining, Cryptocurrencies, Cryptocurrency, Electricity, Energy, FEE, Fees, Hashrate, Kazakhstan, Law, Legislation, Miners, mining, Mining Industry, mining sector, Regulations, Tax, Taxation, Taxes

Do you think Kazakhstan will restore its position as a top destination for crypto mining? Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: Being a writer is who I am, rather than what I do. Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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