Miners in the country will now have to pay increased tax rates tied to the electricity prices consumed by these entities.
Increased Tax Burden for Crypto Miners
Consistent with the rapid advances toward regulating activities related to mining Bitcoin and other crypto-assets, the President of Kazakhstan – Kassym-Jomart Tokayev – has signed a new bill into law.
It seeks to amend the existing law “On Taxes and Other Mandatory Payments to the Budget” as well as the supplementary law improving the deployment of the Tax Code. The development comes after the Central Asian country’s recent crackdown on miners.
The new law imposes greater tax rates on the country’s crypto miners but the exact levies will depend on the average price of electricity utilized while mining assets such as Bitcoin. However, crypto mining farms utilizing electrical energy derived from renewable sources will pay the lowest tax rate, regardless of the cost.
The main goal of the new law is to “equalize the load and discourage the consumption of own electricity.”
Kazakhstan government made $1.5 million in revenue from Bitcoin Miners in Q1 2022. The profits were below expectation partly due to the crackdown on the industry.
Most mining operations in the countries have also been “disconnected from electricity” for over half a year now, citing “energy security.” The government earlier said mining strained Kazakhstan’s electricity grid in the past, and may have possibly contributed to blackouts.
The country was earlier perceived to be a prominent Bitcoin mining hub, but the latest slew of developments may impede its growth.
Pilot Project
Kazakhstan recently announced that it will allow crypto exchanges to open accounts with local banks to operate legally in the Astana International Finance Center in 2022. This initiative is a part of a pilot project launched Ministry of Digital Development, Innovations, and Aerospace Industry of the Kazakhstan Republic and will be functioning until the end of 2022.
The project will include the crypto platforms that have acquired a license from the Astana Financial Service Authority (AFSA). This decision will enable Kazakhstan to amend existing rules and create a regulatory framework for its domestic crypto industry.
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