The government of Kazakhstan has received over $7 million in taxes over the past two years from firms mining crypto I in the country. This news comes as the industry continues to face increased regulatory pressure amid a growing tax burden, which has limited access to low-cost energy.
Legislative changes are impacting the sector
Since the beginning of 2022, miners in Kazakhstan have been ordered to pay taxes and fees. In February, President Kassym-Jomart Tokayev signed the new law to that effect into place.
This law will regulate crypto-related activities such as mining and comes with amendments to the tax code. However, the legislation restricts miners’ access to cheap electricity after they were fingered for power shortages.
The State Revenue Committee of the Ministry of Finance announced that the country’s coffers received 3.07 billion tenge (almost $6.9 million) in tax payments from entities involved in digital assets in 2022.
Meanwhile, they have already paid 240 million tenge (almost $540,000) to the budget, as of April 27. The finance ministry also mandate all those who owe tax fees to pay before May 25.
Kazakhstan’s tax burden is limiting miner’s access to cheap energy
Sergey Putra, Senior Coordinator for Governmental Relations at the National Association of Blockchain and Data Centers Industry in Kazakhstan, said that the adoption of the law demonstrates Kazakhstan’s interest in the development of the crypto industry. However, he also noted that several issues related to other laws or regulations remain relevant.
For instance, miners in Kazakhstan have been disconnected from local sources of electricity for over a year, even amid a surplus from energy-producing companies. The fee for consumed electricity also excludes the possibility for miners to look for sources of electricity at low rates.
As a result, the law’s implementation through by-laws is “extremely difficult and not in the direction of supporting miners and the crypto industry as a whole,” according to Putra. He expressed hope that these issues are temporary and that their solution would bring a new period of development for Bitcoin mining in the country.
While Kazakhstan’s taxation of cryptocurrency mining has generated substantial revenue for the government, miners are facing increased regulatory pressures, including restrictions on cheap energy sources.
These changes have led to a decline in Kazakhstan’s share of global crypto-mining activity, and industry analysts will continue to monitor the situation for future developments. It remains to be seen how the Kazakh government will balance the need for regulation and taxation with the industry’s growth potential.
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