Authorities in Kazakhstan are discussing new regulations for the country’s crypto space that may lead to a serious increase in the tax burden on the mining business. Among the proposed changes is a fivefold hike of the fee miners pay per each kilowatt-hour of utilized electricity.
Mining Companies in Kazakhstan Expected to Pay Much More to the State
Government officials in Kazakhstan are debating over new legislation for the cryptocurrency industry. The authors of a draft law “On Digital Assets in the Republic of Kazakhstan” have covered certain matters that concern the growing crypto mining sector, local media reported.
Quoted by Kazinform, First Deputy Minister of Finance Marat Sultangaziyev noted at a recent meeting of an interdepartmental commission that mining activities are now subject only to registration, but more rules are to come. He also emphasized that it’s very difficult to identify underground miners who consume a lot of electricity illegally.
Kazakhstan has been trying to deal with a growing power deficit since last year when the country welcomed mining companies moving out of China after Beijing launched a crackdown on bitcoin minting operations in May. The shortages were blamed on miners and crypto farms were recently shut down across the Central Asian nation.
The upcoming amendments will make all unauthorized mining illegal. Furthermore, taxation for registered entities will be increased. Last summer, Kazakhstan introduced a surcharge of 1 tenge per kilowatt-hour of consumed electricity, which authorities now want to raise to 5 tenge per kWh ($0.01), Sultangaziyev revealed.
Kazakhstan also plans to impose a levy on mining equipment regardless of whether it’s in use or unplugged. Mining firms will be obliged to report the number and type of their coin minting devices and pay the new fees on a quarterly basis.
Hardware imports, exempted from value added tax at the moment, may also be charged with VAT. A proposal to exclude mining equipment from this exemption has been sent to the Ministry of Economy, the deputy finance minister announced.
Interruptions in power supply have already forced some mining companies to leave Kazakhstan. To deal with the issue, the country increased electricity imports from the Russian Federation last year. The government intends to revive a project to construct a nuclear power plant.
Protests over high energy prices, those of fuels like natural gas in particular, led to political turmoil affecting the crypto mining industry in Kazakhstan, which ranks among the leaders in terms of share of global bitcoin hashrate.
Do you think more crypto miners will leave Kazakhstan if the country increases the tax burden on the industry? Share your thoughts on the subject in the comments section below.