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Kazakhstan Could Soon Introduce A Tax On Crypto Mining Operations

Kazakhstan Could Soon Introduce A Tax On Crypto Mining Operations


Crypto mining has been a hot topic of discussion at this stage, and with China cracking down on local miners, Kazakhstan has emerged as the next big destination for crypto miners. With a major influx of crypto miners over the last few weeks, Kazakhstan is now considering ending the tax-free regime for crypto miners and data centers.

Lawmakers are now proposing an amendment to the Tax Code of Kazakhstan to stop the uncontrolled electricity consumption by crypto mining farms. The amendment proposes a very minimal tax fee of one tenge per one kilowatt per hour starting from January 1, 2022, in case the draft law is adopted.

Well, such a nominal fee introduction is more symbolic rather than a real one. Besides, it aims in kickstarting the crypto administration process in the country. As per the Data Center Industry and Blockchain Association crypto miners in Kazakhstan currently consume 3.3% of the total energy consumption of the country every year. Speaking to local news publication Kursiv, Albert Rau, deputy of the Tax Code Department said:

“We have to adjust our legislation with real-life because as a matter of fact mining work in the country it is done in a parallel reality”.

As per the estimates of local agencies, there are currently 13 crypto mining farms in Kazakhstan and the country accounts for 6.17% of the total Bitcoin mining operations. Outside China, it competes against other giant nations like Russia (6.29%) and the USA(7.15%).

As per the Ministry of Digital Development, Innovations, and Aerospace, crypto mining operations in Kazakhstan generated a revenue of $18-$25 million every month.

Local miners Not Happy With the Crypto Mining Tax Proposal

Despite the minor fees, local cryptocurrency miners in Kazakhstan aren’t happy with the new proposal of taxing crypto operations. Alan Dorjiev, President of Kazakhstan’s blockchain association said:

“Implementation of a new additional tax in a specific industry, in this case in the mining industry, can cause a precedent that would affect Kazakhstan in terms of investment attractiveness. Investors are used to evaluating the risk of regulation impact and would prefer more stable and reliable jurisdictions”.

Dorjiev further added that the electricity costs in Kazakhstan are now at par with that of the U.S, Norway, and Iceland. Introducing an additional tax will further discourage local miners forcing them to move out.

Disclaimer

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

About Author

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.



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