The Kazakhstan government collected $1.5 million from crypto miners in the first quarter of this year, official data show. The money comes from fees charged on electricity spent to mint the digital currency, which was introduced in January.
Crypto Mining Increases Kazakhstan’s Budget Revenue
Kazakhstan received 652 million tenge (about $1.5 million) from the crypto mining industry in the first three months of the year, the government announced this week. The money was collected through a surcharge on electricity used by legally operating mining farms in the country.
The charge, imposed on January 1, 2022, is calculated at a rate of one tenge per kilowatt-hour of electrical energy burned for the extraction of cryptocurrency. Operators of mining facilities are expected to pay it by the 20th of the month following each quarter.
The surcharge is not yet part of Kazakhstan’s tax system. Authorities are currently planning to introduce a differentiated tax rate based on the cost of the electricity used, and the necessary amendments were recently approved by the lower house of parliament, the Mazhilis, after the first reading.
The move is expected to further increase budget revenues on the one hand and limit electricity consumption for the production of energy-intensive digital currencies on the other. The Central Asian country became a major mining hotspot after China cracked down on the industry last May.
An influx of miners has been blamed as the main cause of the country’s growing power shortages, leading to the temporary shutdown of dozens of mining sites. Some companies have already been forced to pull out due to power shortages.
At a government meeting in February, President Kassym-Jomart Tokayev ordered authorities to “double” the tax on crypto mining. He also ordered the country’s financial watchdog to identify all mining farms in the country and check their tax and customs documents.
In early May, Kazakhstan expanded its miner registration rules and reporting requirements, requiring companies to submit extensive information on the energy needs of their mining equipment, planned investments, and number of employees. Meanwhile, government auditors are trying to close tax loopholes used by some miners.
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