The State Revenue Committee of the Ministry of Finance revealed that in 2022, companies engaged in the mining of digital currencies had paid 3.07 billion tenge (almost $6.9 million) in taxes to Kazakhstan, as reported by local media.
Since January 1st of last year, cryptocurrency miners in the Central Asian nation have been subject to taxes and levies. By April 27, 2023, they had already contributed 240 million tenge (nearly $540,000) to the budget. The finance ministry reminded people that the deadline for making all first-quarter payments due was May 25.
The new law, titled “On Digital Assets in the Republic of Kazakhstan,” was signed by President Kassym-Jomart Tokayev on February 6 of this year, however, some of its provisions have not yet taken effect. Along with changes to the tax legislation, it controls cryptocurrency-related activity like mining. Most significantly, the legislation limits miners’ access to low-cost electricity after they are held accountable for power outages.
In Sergey Putra’s opinion, the approval of the law reflects Kazakhstan’s interest in the growth of the crypto business more broadly. Sergey Putra is the Senior Coordinator for Governmental Relations at the National Association of Blockchain and Data Centre Businesses in Kazakhstan.
Despite an abundance of energy-producing firms, Putra continued, “Miners in Kazakhstan have been cut off from local sources of electricity for more than a year.” “Excluding the option for miners to hunt for sources of power at cheap prices is an extra levy on the used electricity.”
According to the industry organization spokesman, “the fee is distinct and raises the cost per kilowatt-hour.”
The implementation of the law through by-laws, according to Sergey Putra, is “extremely difficult and not in the direction of supporting miners and the crypto industry as a whole.” He expressed optimism that these problems would only last a short time and that finding a solution would usher in a new era of growth for Bitcoin mining in the nation.
When China tightened its grip on the industry in November 2021, Kazakhstan quickly became a hub for cryptocurrency mining.
During the last bull market in 2021, a flurry of multinational mining companies moved to Kazakhstan, complicating already tense ties between the nation and miners. According to certain projections, by November 2021, more than 87,849 rigs would have entered the region.
Kazakhstan is one of the top Bitcoin mining countries in the world. According to data from the Cambridge Centre for Alternative Finance, the Central Asian nation provided 13.22% of the overall Bitcoin hash rate as of January 2022, trailing only the United States (37.84%) and China (21.11%).
Jaran Mellerud, an industry expert based in Norway, claims that Kazakhstan’s participation has since decreased from a peak of 18% in October 2021 to barely 4% as of May 2023.
To avoid tax fraud and illegal business practices, the government has announced plans to impose new cryptocurrency rules. One proposal would compel miners to sell at least 75% of the cryptocurrency they generate through authorized exchanges, while another would require secured digital asset issuers to have government clearance. The action is anticipated to lower tax evasion.