Kazakhstan To Introduce Electricity Levy On Bitcoin Miners
Following China's crackdown on mining farms, Kazakhstan has decided to leverage its increasing crypto attention by introducing taxation on the crypto mining industry within the country.
How it Began
It started with China’s ban of mining farms within its regions, and the quick migration that followed. Before China’s crackdown, Kazakhstan, Malta, and the United States trailed China in hashrate shares and concentration of mining pools. The past month, however, has seen a gradual segue of the most influential mining pools into more welcoming countries like Kazakhstan, which are popular for their cheap electricity tariffs and their acceptance of crypto miners.
It is not a surprise that new mining farms are beginning to set up shop in the country, in addition to the original 13 mining farms that had once embraced the cold weather. It is also not a coincidence that the first appearance of a crypto mining taxation proposal came in early June, just at the time when China’s crackdown became inevitable. Kazakhstan’s mining bill proposal requested amendments to the country’s Tax Code to include an additional tax fee per kilowatt-hour of energy utilized by crypto miners operating in the country.
On Monday, the 5th of July, the bill was approved and signed into law. The announcement was made via an official notice and was declared by the Head of State of the Republic of Kazakhstan, Kassym-Jomart Tokayev. The new law will come into effect starting from January 1, 2022, and is already expected to generate billions in the national currency, Tenge.
The General State Of The Kazakhstani Crypto Industry
Kazakhstan has served as a host for more than a dozen mining farms in the past, but it looks like it is set to receive even more displaced workers from China. Only last week, BTC.com, one of the earliest and biggest mining pools, completed its move from China to the landlocked state of Kazakhstan. Regulation is favorable, and electricity in the country is cheap, which makes it an appealing choice for miners.
Despite the earlier hike in fees, electricity tariffs for crypto miners are just about $0.03-0.04 per kWh in Kazakhstan, much cheaper than in most other countries. Electricity costs in China and the US are estimated to be about $0.08$-$0.09 per KWh and $0.09-$0.13 per KWh respectively.
Kazakhstan 13 crypto mining farms were earlier said to consume an estimated 3.3% of the country’s total electricity. Its Bitcoin mining sector accounts for around 6.17% of the global market ratio, rivaling the USA, which accounts for 7.15%, and Russia with its 6.29%. In terms of Bitcoin hash rate share, it is the fourth largest country in the world. Asides Bitmain’s BTC.com, ASIC manufacturer Canaan is also making plans to move into the country.
Like Bitmain, Canaan began sending units to Kazakhstan late last month, following similar investments made by the BTC.com owner in May. As China’s crackdown continues, Kazakhstan’s numbers only look more likely to increase.
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