Kazakhstan’s authorities are debating new legislation for the country’s crypto space, which might result in a significant increase in the mining industry’s tax burden. A fivefold increase in the rate miners pay per kilowatt-hour of used electricity is one of the suggested modifications.
Kazakhstani mining companies are expected to pay much more to the government. Kazakhstani lawmakers are contemplating new regulations for the bitcoin business. According to local media, the writers of a draft law titled “On Digital Assets in the Republic of Kazakhstan” have addressed a number of issues related to the burgeoning crypto mining industry.
According to Kazinform, at a recent meeting of an interdepartmental panel, First Deputy Minister of Finance Marat Sultangaziyev stated that mining activities are currently just subject to registration, but that more laws are on the way. He also stressed that identifying underground miners who utilise a lot of electricity illegally is challenging.
Government district in Nur-Sultan.
Since last year, when Kazakhstan welcomed mining businesses fleeing China when Beijing initiated a crackdown on bitcoin mining activities in May, the country has been attempting to address a rising power shortfall. Miners were blamed for the shortages, and crypto farms were recently shut down across Central Asia.
All unlicensed mining will be banned under the proposed revisions. In addition, the tax burden on registered entities will be increased. Kazakhstan instituted a 1 tenge per kilowatt-hour of spent electricity surcharge last summer, which authorities now plan to increase to 5 tenge per kWh ($0.01), according to Sultangaziyev.
Kazakhstan also intends to charge a levy on all mining equipment, whether it is in operation or not. Mining companies will be required to record the quantity and type of coin minting devices they use on a quarterly basis, as well as pay the additional costs.
Imports of hardware, which are currently exempt from VAT, may be subject to VAT in the future. According to the deputy finance minister, a proposal to remove mining equipment from this exemption has been sent to the Ministry of Economy.
Some mining corporations have already been forced to leave Kazakhstan due to power outages. Last year, the country doubled its electrical imports from the Russian Federation to address the problem. A project to build a nuclear power plant is being revived by the administration.
Protests over high energy prices, particularly those of fuels like natural gas, have wreaked havoc on Kazakhstan’s crypto mining business, which ranks among the top in terms of global bitcoin hashrate.