Crypto Stories

Crypto Tax: Kazakhstan Recommends Tax On Cryptocurrency Miners

By Gitumani Talukdar
Published February 8, 2022 Updated February 8, 2022

Kazakhstan’s national grid operator has begun restricting energy to the country’s largest customers, with cryptocurrency mining farms presumably being the target. Officials might be rethinking their recent acceptance of the crypto business in the face of a looming energy deficit.

Bitcoin’s worldwide processing power dropped roughly 13% after data centers used to mine the cryptocurrency were knocked offline due to shutdowns during an uptick in instability in the nation.  

Read More: Kazakhstan Suggests A 500% Tax Increase

To accomplish the mathematical calculations required to produce new blocks on the network, Bitcoin mining requires specialized computer hardware. Up to 10,000 mining rigs, comprising ASICs (application-specific integrated circuits), GPUs, racks, cooling units, and other equipment, are housed in more extensive mining operations.

According to Alan Dorjiyev of Kazakhstan’s National Association of Blockchain and Data Center Industry, most crypto producers are now back online, which represents 80% of the country’s legitimate mining enterprises.

Playing With Strength

Kazakhstan’s crypto mining farms are primarily fueled by old coal plants, causing problems for the government as it attempts to decarbonize the economy. The former Soviet state has been obliged to import electricity and curtail local supply due to power-hungry miners.

However, Kazakhstan’s comparatively low taxes, labor expenses, and equipment continue to be advantageous, according to the four miners. According to Matkenov, power costs a minimum of $0.03-$0.04 per kilowatt, comparable to the United States and less than $0.05 in Russia.

The single most crucial thing attracting miners appears to be low-cost power. According to Cointelegraph, the United States “cannot hang on to the mining champion title for long” since it cannot deliver the lowest energy. Removing that edge from Kazakhstan’s miners might spell disaster for the country’s plans to take $1.5 billion from miners in the next five years.