Crypto Firms in Kazakhstan Plead For Tax Revisions Amid Threatened Exodus
The Kazakh government has come under fire from legally-operating crypto mining companies, who condemned the current costly state of their industry, with principal firms expecting to exit from the Central Asian nation by the end of this year. This stern warning was issued by key industry players.
Kazakh Unfair Tax Legislation Criticized by Miners
The crypto mining industry in Kazakhstan, authorised by the state, has voiced their increasing concerns about the escalating production costs. These increased costs come after the government removed access to subsidized electricity and imposed a tiered system of surcharges for the power consumed by these companies.
Eight firms in the digital currency sphere engaged in an open letter to President Kassym-Jomart Tokayev, appealing for reconsideration of the current taxation rules enforced on their industry. The firms stated that the cryptocurrency mining sector within the nation is approaching critical condition. They ominously unveiled:
The largest industry players have temporarily halted their operations and are planning their complete exit from the Republic of Kazakhstan’s business landscape by the end of this year.
The miners emphasized the legitimacy of their operations, including their licensing conduct, the legal status of their data centers relationship with the power grid, and their compliance in registering their computing equipment. Their letter also mentions the establishment of a clear mechanism to calculate the corporate taxes levied on their income.
On a note of cooperation, the digital currency businesses stated that they have willingly partnered with the government in their endeavour to regulate the market. They mentioned, however, that this positive partnership is nullified by the flawed and unequal taxation policy of Kazakhstan. They further stated:
Consequently, our nation’s contribution to the worldwide digital mining sphere has drastically plummeted, dropping from 14.03% in 2022 to a mere 4% within a year.
The miners stressed that the variable additional fee rate on electricity, which could hit 26 tenge (comparable to $0.05) per kWh based on the core price, essentially devastates the industry. The electrical energy’s cost can represent up to 80% of the value of the cryptocurrencies mined, they revealed.
Following China’s assumed attack on the industry two years ago, Kazakhstan emerged as a new favorite location for crypto mining. The country’s rising power shortage was largely blamed on the inrush of miners. Tighter regulations and power restrictions led to the gradual exodus of mining firms from the country. It was reported that the renowned Chinese mining company, Canaan, paused approximately 2 exahash per second (EH/s) of its computing power in Kazakhstan since July.
Where do you envision most crypto miners will migrate if they do end up abandoning Kazakhstan?
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Frequently asked Questions
1. Why are crypto miners leaving Kazakhstan?
Crypto miners are leaving Kazakhstan due to high taxes imposed on their operations.