Kazakhstan's Crypto-Miners Appeal to President Over High Energy Costs and Taxes
Summary:
Kazakhstan's local crypto-mining operators, who make the country the third-largest global Bitcoin mining market, have appealed to the national leader about steep energy costs. Eight major industry players, including BCD Company and TT TECH Limited, have signed an open letter warning about the potential extinction of the country's digital mining industry due to high energy prices and taxation. The country initiated energy consumption-based taxes on digital mining from January 1, 2022, causing discontent in the industry despite the cost of electricity remaining lower than in other leading mining countries such as the US.
In Kazakhstan, recognized as the world's third largest Bitcoin mining hub, local cryptocurrency miners are voicing their concerns about steep energy costs to the country's president. Local media has reported that a group of eight major industry players penned an open plea to President Kassym-Jomart Tokayev, inclusive of companies such as BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution Ltd., VerCom, and KINUR INVEST. The communique emphasizes the current challenging climate experienced by the Kazakh crypto-mining sector, primarily due to escalated energy costs. The dispatch suggests: “Currently, significant players in the industry have ceased operations and envisage a total shutdown in Kazakhstan by year’s end.” The correspondents believe that these adverse price circumstances could potentially undermine the government's regulation efforts pertaining to the crypto market and particularly, its mining aspect. They assert that this issue is a direct result of the decision to increase energy taxes on cryptocurrency miners. High taxation has eroded the country's standing among other dominant crypto mining nations like the US, Russia, and China, posing a threat to the survival of the local industry. It warns: “Without timely government intervention, Kazakhstan's digital mining industry faces certain demise.” Effective since January 1, 2022, Kazakhstan has instituted a tax on digital mining, centered around electricity consumption. This legal measure came into being as a response to mounting domestic discontent over low taxation related to power grid usage by cryptocurrency miners. Despite these costs, taxed electricity in Kazakhstan still costs miners an average of $0.067 per kWh, considerably below the US pre-tax average of $0.12 per kWh. Based on governmental records, tax revenue accrued from digital mining to date in 2022 amounts to a meager $7 million (3.07 billion tenges).
Published At
10/3/2023 9:40:23 AM
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