Official figures show that the Kazakh government collected $1.5 million from crypto miners in the first quarter of this year. The money comes from electricity bills for minting the digital currency, introduced in January.
Crypto mining boosts Kazakhstan’s budget revenue
Kazakhstan received 652 million tenge (about $1.5 million) from the crypto mining industry in the first three months of this year, the government of Kazakhstan announced this week. The funds are collected through a surcharge on electricity used by mines operating legally in the country.
The fee, levied on January 1, 2022, is calculated at a rate of 1 tenge per kilowatt-hour of electrical energy used to extract cryptocurrency. Entities operating mining facilities are expected to make payments no later than the 20th of the month following the respective quarter.
Surcharges are not yet part of Kazakhstan’s tax code. Authorities now plan to introduce different rates based on the cost of electricity used, and the necessary amendments were recently approved in the first reading of the Mazhilis, the lower house of parliament.
On the one hand, this move is expected to further increase budgetary revenue, and on the other hand, limit the electricity consumption of energy-intensive digital currency production. The Central Asian country became a major mining hotspot after China cracked down on the industry last May.
The influx of miners has been largely blamed on a growing power shortage in the country, which has led to the temporary closure of dozens of mines. Power shortages have forced some companies to leave the country.
At a government meeting in February, President Kassym-Jomart Tokayev tasked officials with “increasing” taxes on crypto mining. He also ordered the state financial regulator to identify all mining farms in the country and check their tax and customs documents.
In early May, Kazakhstan expanded registration rules and reporting requirements for miners, requiring companies to submit a wide range of information, including the energy needs of their mining equipment, planned investments and the number of employees. Meanwhile, government auditors have been working to close tax loopholes exploited by some miners.
Do you expect more mining companies to leave Kazakhstan as tax burdens and regulatory requirements increase? Let us know in the comments section below.
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