Kazakhstan’s new policy requires bitcoin mining firms to pay an extra tax on the electricity they use.
Kazym-Jomart Tokayev, President of the Republic of Kazakhstan, recently signed legislation amending the country’s tax and budget payment codes, which included the introduction of a new tax on cryptocurrency mining operations.
A tax of 1 Kazakhstan tenge ($0.0023) per kilowatt-hour (kWh), which will be charged to cryptocurrency miners, will be imposed by the amendments, which will take effect on January 1, 2022, and will be implemented gradually.
In an earlier interview with local news outlet Kursiv, Albert Rau, who chairs the committee for economic reform and regional development and is the author of the new legislation, said that energy fees on miners would not only bring the mining industry under state regulation, but would also help reduce “uncontrolled consumption of energy”.
According to the local mining community’s complaints, it appears that the government has mainly ignored them.
Kazakhstan’s National Association of Blockchain and Data Center Industry called a press conference in May, at which its president, Alan Dordzhiev, stated that mining operators were already struggling to make ends meet and that the increased fees would deter investors from entering the industry.
Chinese cryptocurrency miners have arrived in large numbers. As a result of the inflow of Chinese cryptocurrency miners into Kazakhstan, the country has passed a new law to regulate them.
China has tightened its grip on cryptocurrency mining in recent months, with regions such as Sichuan, Yunnan, and Qinghai forcing miners to cease their operations.
Many bitcoin miners have shifted to nations such as Kazakhstan as the hashrate of bitcoin has decreased, in quest of lower electricity costs and a more welcoming legal environment.
Bitcoin mining company BIT Mining, which manages the BTC.com mining pool, dispatched the first of 320 mining equipment to Kazakhstan earlier this month, with a further 2,600 machines due to arrive by July 1.
BIT Mining is a Chinese Bitcoin mining company that operates the BTC.com mining pool. To serve the new market, Canaan, a maker of bitcoin mining hardware, has already established its first overseas facility in the country.
In an interview with ForkLog last week, Alan Dordzhiev said the decision to impose new fees on cryptocurrency mining firms will have a “significantly negative impact” on the industry’s investment attractiveness.
He also stated that Chinese miners who were considering Kazakhstan as a viable jurisdiction in which to relocate their operations are “disturbed” by the current initiative.