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Kazakh President Kassym-Jomart Tokayev has signed a bill amending the country’s tax code to impose higher tax rates on crypto miners. The tax will depend on the amount and average price of electricity used in the extraction of digital currencies such as bitcoin.
President Tokayev of Kazakhstan has signed new legislation introducing amendments to the country’s law “On taxes and other mandatory budget payments” and additional legislation that improves the implementation of the tax law. The changes introduce differentiated tax rates for cryptocurrency mining.
The exact taxes will be determined based on the average price of the electricity consumed to mint coins during a certain tax period. They start as low as 1 Kazakh tonne (approximately $ 0.002 at the time of writing) per kilowatt-hour (kWh), when a miner paid 25 tonne or more ($ 0.053) per kWh, and can reach 10 tenge, if the electricity tariff was in range 5 – 10 tenge ($ 0.011 – $ 0.021).
Cryptopharms that use electrical energy generated from renewable sources will pay the lowest tax rate of 1 tonne per kWh, regardless of cost. This supplement was enforced on 1 January 2022, after the Central Asian country saw an increasing power deficit through last year. The shortfall was due to the influx of crypto miners who followed China’s decision to strike down industry in May 2021.
Kazakhstan also sought to restrict cryptocurrency mining by imposing restrictions on power supply during the cold winter months and closing down minting facilities in the regions. The measures forced some companies to move to other mining hotspots or move a significant part of their equipment out of the country.
In February, President Tokayev ordered the relevant authorities to identify all cryptocurrency miners operating in Kazakhstan and increase their taxes. In April, state auditors went after mining companies that allegedly exploited tax benefits they were not supposed to benefit from.
That month, the government of Nur-Sultan announced that it was preparing to increase the tax burden on miners, and one of the first proposals was to link the new exchange rate to the value of the embossed cryptocurrency. According to official statements, the new tax rules are expected to even out the load on the electricity grid and counteract the consumption of domestically produced electricity for mining.
Do you expect more crypto miners to leave Kazakhstan after the tax increase? Share your thoughts in the comments section below.
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