From the beginning of 2023, cryptocurrency miners operating in Kazakhstan will be obliged to pay new fees for the electricity needed to create digital coins. The surcharge introduced in 2021 now depends on the price of electricity consumed by Bitcoin farms and could be much higher than the original levy.
New Year Brings High Costs to Companies Mining Cryptocurrencies in Kazakhstan
Starting January 1st, the electricity charges levied on cryptocurrency miners in Kazakhstan are calculated according to a progressive scale. The first universal surcharge of 1 Kazakhstani tenge ($0.002) per kilowatt hour (kWh), first introduced in the summer of 2021, could now reach 25 tenge ($0.05 and above).
The rate in each case depends on the source and price of the electrical energy used to extract the digital currency. A new mechanism to determine tariffs was introduced in July 2022 with a bill amending the country’s tax law signed by President Kasim Jomart his Tokayev.
The basis for taxation is the average price of electricity consumed by miners during a specific tax period. If a company pays more than 24 tenge per his kWh, it will charge a minimum rate of 1 tenge, according to the latest tariff quoted by Interfax Kazakhstan and other local media.
The lowest rates are also offered to crypto farms that use renewable energy without considering electricity bills. And for energy generated from other sources, the cheaper the electricity you use, the heavier the tax burden. According to the details of the report, the charges could be up to 25 tenge per kWh.
Kazakhstan has become a mining hotspot after China cracked down on the industry in 2021, attracting crypto miners with low subsidized electricity prices. The influx of mining companies has been blamed for the country’s growing power shortage.
Authorities in Nur-Sultan are taking steps to track down unlicensed mining farms and regulate the sector more comprehensively. Provisions in a new bill, adopted by the Kazakhstan parliament in December, aim to oblige miners to purchase surplus electricity on a government-controlled market.
A previous legislative proposal put forward by a group of lawmakers in October limited mining to registered companies only. Also, non-residents can mine in the country as long as they have a contract with a locally licensed data center.
Do you think the new fees may cause some mining companies to exit Kazakhstan? Share your thoughts on the matter in the comments section below.
image credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. This is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. NEITHER THE COMPANY NOR THE AUTHOR WILL BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY DAMAGE OR LOSS ARISING OR ALLEGED TO OCCUR ARISING OUT OF OR RELATING TO YOUR USE OF OR RELIANCE ON ANY CONTENT, PRODUCTS OR SERVICES DESCRIBED IN THIS ARTICLE. We are not responsible.
