Kazakhstan is all set to begin taxing crypto miners. New regulations were passed in the country’s capital of Nur-Sultan (previously known as Astana) that will require all digital currency miners to pay taxes on the energy they use to extract new coins and place them in circulation.
Kazakhstan Is Facing an Energy Crisis
The situation likely arises as Kazakhstan is becoming one of the biggest regions for crypto miners of the last several years. This stems from the fact that the nation is now home to many of the crypto miners that once set up projects in China, which was the biggest crypto mining haven up until about a year ago. The country set new rules in place last summer that banned all crypto miners from its turf as Beijing was looking to become more carbon neutral.
Thus, many miners had to close their shops permanently or find new homes. Many fled to Kazakhstan, which is a nearby nation and found that the cheap energy there was perfect for their operations. Sadly, this had led to something of an energy crisis in the country, and now it looks like the nation’s lawmakers want to earn something a little extra for all the newfound requirements being placed on their shoulders.
The new tax laws would ensure electricity payments are connected to average prices in given time periods. This is only if the operations in questions run on renewable or green energy. However, those that do not would likely face taxes about ten times larger.
Economic Minister Alibek Kyantyrov explained in a recent interview:
The sole goal of the rule is to make digital miners pay more for the electricity they consume. We’ve discussed the issue with the business community and associations. We have decided to introduce differentiation.
Kyantyrov says that this would ultimately level the playing field and prevent private energy sources from being overly used or consumed. While he’s enthusiastic about the move, others – including Elnur Beysembayev, a member of the Kazakhstan parliament – are not. In a statement, Beysembayev explained:
You are going to differentiate payment rates for mining in different regions where electricity prices may vary. You want to oblige miners to pay more when the electricity price is low, but what if this practice would force miners to concentrate in one place? A place where the average cost of electricity is relatively low? I mean, there is a risk of a potential shortage of electricity local businesses and citizens may face.
Will China Return?
With China having ended its crypto route, the United States has ultimately taken over as the world’s primary hub for crypto mining.
However, it looks like China may be making a comeback, as there are several crypto miners that refused to leave and have simply taken their operations underground.