Eight prominent cryptocurrency mining operators in Kazakhstan, a country known for hosting a significant portion of the world’s Bitcoin mining activities, have jointly expressed their concerns about high energy prices to President Kassym-Jomart Tokayev. In an open letter addressed to the President, these operators, including BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom, and Kinur Invest, have highlighted the challenging situation facing the Kazakh crypto mining industry.
According to the letter, the cryptocurrency mining industry in Kazakhstan is currently facing a “very distressful situation” primarily due to the high energy costs incurred by miners. As a result of these escalating energy prices, all major players in the industry have suspended their operations and are planning to completely exit the Republic of Kazakhstan by the end of the year.
The executives who signed the letter are concerned that the high energy prices are hindering the government’s efforts to effectively regulate the cryptocurrency industry, particularly the mining sector. The root cause of this issue, as stated in the letter, is the decision to increase taxes on energy consumption by crypto miners. These higher taxes have already caused Kazakhstan to lose its competitive position in the global cryptocurrency mining landscape, as it can no longer compete with countries like the United States, Russia, and China. Consequently, the cryptocurrency mining industry in Kazakhstan is on the verge of collapse.
![Kazakh Crypto Mining Industry at Risk as Miners Plead for Energy Price Cuts image 18](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/10/image-18.png?resize=851%2C566&ssl=1)
![Kazakh Crypto Mining Industry at Risk as Miners Plead for Energy Price Cuts image 18](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/10/image-18.png?resize=851%2C566&ssl=1)
The open letter emphasizes that unless immediate measures are taken by the government to address the issue, the digital mining industry in Kazakhstan will cease to exist. The introduction of taxes on digital mining in Kazakhstan, which took effect on January 1, 2022, was based on the electricity consumption of mining entities. This legislative move was driven by growing national concerns about the undertaxed utilization of the national power grid by cryptocurrency miners.
It is worth noting that even with the highest level of taxation, 1 kilowatt-hour (kWh) of electricity in Kazakhstan is still considerably cheaper for miners, costing approximately $0.067, compared to the average pre-tax rate of $0.12 per kWh in the United States. The Kazakh government has reported receiving around 3.07 billion tenges ($7 million) in tax payments from cryptocurrency mining entities in 2022.
The situation in Kazakhstan highlights the intricate relationship between the cryptocurrency industry and government policies, taxation, and energy costs. The outcome of this issue will likely have a significant impact on the future of cryptocurrency mining in the country.
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