Kyrgyzstan Sees Dramatic Surge in Cryptocurrency Mining Tax Revenues in 2023
Summary:
Throughout the first 11 months of 2023, the Kyrgyzstan government amassed nearly $883,000 in taxes from cryptocurrency miners, marking a significant increase from the previous year. There has been high volatility in tax earnings, which are levied at 10% of the electricity expenditures. The majority of miners in Kyrgyzstan depend heavily on hydropower, with energy consumption concerns continuing to be a controversial issue. Meanwhile, cryptocurrency exchanges remain legal within the country, although the circulation of cryptocurrency is unregulated.
For the first 11 months of 2023, the Kyrgyzstan government garnered 78.6 million soms (approximately $883,000) in cryptocurrency mining taxes, as stated by local financial news sources citing the Finance Ministry. This denotes a significant surge compared to the prior year's earnings. The 2023 tax revenue from crypto mining in Kyrgyzstan experienced fluctuations, with a low of 738,000 soms ($8,284) in February and reaching a peak of 11.6 million soms ($130,212) in August. In November, the most recent reporting period, the takings were stable at 7.6 million soms ($85,767), showing a decline from the August peak. Only one officially recognized cryptocurrency mining firm is currently functioning in Kyrgyzstan, a drop compared to the previous numbers.
The tax earnings from crypto mining for the initial 11 months of 2022 were at 11.1 million soms ($133,200). The tax regime includes a 10% taxation on the electric power expense, inclusive of value-added and sales taxes. On a related note: Global needs are shifting from banks, policymakers and NGOs to DeFi.
Kyrgyzstan boasts of a vast amount of water resources characterized by glaciers, high-altitude lakes, and rivers spanning over 35,000 km. Despite this, most remain underutilized according to government reports. Furthermore, Hydropower is the primary source of energy for the country's crypto miners. As part of national tech development efforts, large numbers of Kyrgyz youth are getting coding training.
In July 2023, Kyrgyz President Sadyr Japarov approved the establishment of a crypto mining site at the Kambar-Ata-2 Hydro Power Plant. In Kyrgyzstan, crypto miners pay a rate that is five times higher than what the general public pays. In 2023, low fill levels at dams and contractual delivery constraints related to adjacent nations resulted in constrained crypto production. Miners had to import electricity due to this limitation and in certain instances, this requirement extended to the government. The country's crypto miner occasionally faced hardships in procuring imported power. Nevertheless, by the onset of October 2023, 17 million KWh of electricity had been consumed by the industry.
The energy usage by crypto miners has been a point of contention for an extended period. Cryptocurrency exchanges are legitimate within the country, however, there is no regulation regarding cryptocurrency circulation. Featured story: Life sentence for Bitcoin miner, China offers rewards for crypto firms - Asia Express.
Published At
1/1/2024 11:24:04 PM
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