The country’s president has recently signed a law that will impose additional tariffs for electricity used by energy-intensive industries, like crypto mining.
Electricity Prices Hiked To Draw Out Illegal Mining Operations
Crypto miners in Kazakhstan will have to shell out more from their pockets to pay for the higher electricity supply that is needed for mining operations. Earlier this week, president Kassym-Jomart Tokayev signed a law to introduce a new electricity tariff of 1 Kazakhstani term (~$0.0023) per kW-hr for cryptocurrency miners, effective from January 1, 2022. The bill, which was first voted on by the Senate in June, seeks to amend the country’s law “On taxes and other compulsory payments in the budget.”
According to Nur-Sultan officials, the law was passed to legitimize the country’s crypto mining activities. The additional fees will help shine the spotlight on crypto miners who carry out underground schemes.
Concerns For Chinese Crypto Miners Amidst Tariff Hike
The hike in electricity prices for crypto mining businesses is happening right after the nationwide crypto crackdown in China. Chinese miners are actively looking to shift base to other crypto-friendly nations, and Kazakhstan is on that list. However, the country’s crypto industry is concerned that the hike in electricity prices could turn away potential Chinese miners. Members of Kazakhstan’s National Association of Blockchain and Data Center Industry have claimed that the bill “will have a very negative impact on the investment attractiveness of the industry.”
However, according to MP Albert Rau, who authored the bill, there would not be any “serious consequences” as a result of adopting it. He also claimed that the Parliament had initially approved the official version of the proposed amendments.
Kazakhstan’s Crypto Endeavours With Chinese Miners
Kazakhstan’s vicinity to China, its energy surplus, and its openness to the mining industry have made it a top destination for miners moving out of China. In May, Shenzhen-based firm Bit Mining announced its plans to build a 100 MW mining data center in Kazakhstan in partnership with two local firms. With Chinese authorities imposing stricter regulations on mining operations, the company began shipping mining equipment to Kazakhstan. Earlier this month, Hangzhou-headquartered mining hardware maker Canaan set up an after-sales service center in Kazakhstan as more Chinese miners look to move to Central Asia.
Arman Batayev, deputy director of the investment department of AIFC Business Connect Ltd., an entity under Kazakhstan’s financial hub Astana International Financial Centre (AIFC), tweeted,
“Thank you everyone! That was crazy week. KZ overall had 200MWt spare capacity and all was booked in a matter of weeks. Further expansion will require new power plants.”
According to Kazakhstan-based Didar Bekbauov, whose company Xive provides mining equipment, Chinese miners have been enquiring about relocation options.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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