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70% of crypto miners left Kazakhstan

08.02.23 21:00
Kazakhstan has lost its leading position in the world in terms of hashrate (performance of all mining equipment) and returned to the position acquiring in the beginning of 2021, Forbes Kazakhstan reports with reference to Ranking.kz.

According to the latest data from the Kazakhstan Association of Blockchain Technologies (KABT), the country’s share in the global hashrate has fallen from 18.3% to 6%, says the Chairman of the Board of the KABT Sapar Akhmetov at the panel session of the Kazakhstan Blockchain Day 2023 forum.

One of the main reasons for this phenomenon is the “whitening” of the domestic market from “gray” miners, its legalization. According to Sapar Akhmetov, during patrol inspections in the Republic of Kazakhstan, 70% of crypto miners were disconnected from power supply and left the country. We are talking about those who mined cryptocurrency undercover, without going public about their business and consuming a large amount of electricity.

The previous year has become difficult not only for “gray”, but also for “white” miners, who legalized in Kazakhstan and began to represent a new type of business. The stress factor was the record-breaking fall in bitcoin quotes in the history of the global crypto industry — from $41.5 thousand at the beginning of 2022 to $16.6 thousand in December. Namely, this digital coin is the most popular among Kazakhstani crypto-miners: 98% of mining farms in Kazakhstan mine bitcoins.

2022 was the first year that farm owners started paying a tax on mining. From January 1, the rate was approved at the level of 1 tenge per 1 kilowatt of energy used. According to information provided to Ranking.kz by the Ministry of Digital Development, Innovation and Aerospace Industry (ICDIAP), for the first three quarters, miners paid 2.3 billion tenge (US$5.08 million) in taxes to the budget. There is nothing to compare this figure with yet…

From January 1, 2023, the tax rate for miners has become differentiated and has increased significantly. According to ICRIAP, presently it depends not only on the amount of electricity consumed, but also on its price. The higher the cost of purchased energy, the lower the tax on it. The rate ranges from 1 to 25 tenge per kW (on average 10 tenge per kW).

In addition, the draft law “On Digital Assets in the Republic of Kazakhstan” is currently submitted to the president for his signature, according to which, from April 1, miners will have to license their activities and start paying another tax - value added. If President Kassym-Jomart Tokayev signs the bill draft, then crypto miners will have to pay taxes, similar to all other producers of goods, depending on the profits received.

The miners themselves are unhappy with the taxation system, Forbes Kazakhstan reports.