Sign Up on MEXCBitcoin Mining Surge Boosts Kyrgyzstan’s Tax Revenue Amid Regulatory Challenges
Bitcoin mining has seen an uptick in Kyrgyzstan in the first eleven months of 2023, state media reported on Monday.
Bitcoin mining-related tax revenue soars
In the first eleven months of 2023, the government of Kyrgyzstan collected 78.6 million soms, nearly $883,000 in tax revenue from Bitcoin and crypto mining, representing a significant increase from the 11.1 million soms collected in the same period a year ago.
Kyrgyzstan’s crypto adoption
Virtual currency usage and mining in Kyrgyzstan have been on a constant increase since 2020.Moreover, the abundance of hydroelectric resources in the country creates a conducive environment for growth. In 2021, the country’s central bank started developing draft laws for virtual currencies to recognize the various trading exchanges.
Being a resource-rich country that can produce ample amounts of energy, Kyrgyzstan holds the power to become a powerhouse for Bitcoin mining
Back in July 2023, President Sadyr Japarov approved the establishment of a Bitcoin mining facility at the Kambar-Ata-2 Hydro Power Plant. It is the only Bitcoin mining facility in the country.
Shortfalls in regulation
Kyrgyzstan possesses profuse water resources in the form of glaciers, lakes, and rivers. Though available in abundance, the country’s resources are still underdeveloped. Previously, Kyrgyzstan went into an energy crisis when the hydropower in the country was used excessively for Bitcoin mining.
That led to the government of the country taking measures to impose restrictions on bitcoin mining. Bitcoin miners also have to pay a 10% tax, which is levied on the cost of electricity, encompassing value-added and sales taxes.
The amount is a bit higher than what regular customers have to pay for electricity consumption, making the whole crypto mining process a bit discouraging for users.
Meanwhile, cryptocurrency exchanges are reportedly legal in the country, but the circulation of cryptocurrency is not regulated. The establishment of a dedicated crypto mining facility and the central bank’s efforts to regulate virtual currencies indicate a significant shift towards institutionalizing cryptocurrency in the national economy. However, challenges such as the need for more developed infrastructure and careful regulation to prevent energy crises loom large.
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