Kazakh Crypto Mining Tax Hike Signed Into Law by President Tokayev
The tax rate will depend on electricity usage, average electricity price and power source.
Kazakhstan President Kassym-Jomart Tokayev on Monday signed into law amendments to the tax code to increase levies on crypto miners, a move he had called for in early February to counter the nation's struggle with electricity shortages.
- In February, Tokayev said that the rate of 1 Kazakh tenge (US$0.0021) per kilowatt of power is "negligible" and instructed the government to increase the tax as soon as possible and to come up with a full proposal for crypto mining regulation by April 1. The 1 tenge tax came into effect on Jan. 1.
- The new tax rate will be determined by the average price of the electricity consumed to mine coins during a certain tax period, according to a copy of the amendments published on hosting site Zakon.kz. The range is between 1 tenge per kilowatt hour (kWh), if a miner is paying more than 24 tenge per kWh for electricity, to a tax of 25 tenge per kWh, if a miner is paying less than 1 tenge per kWh, according to the amendments.
- The law effectively brings the price of electricity including tax to around 25 tenge, or 5 cents, per kWh with some exceptions. That is about the maximum price that miners are looking for in other countries such as the U.S. and Canada.
- Miners that use their own electricity, an example of behind-the-meter consumption, will pay 10 tenge per kWh in taxes, whereas those who use renewable energy that they produce will pay 1 tenge per kWh, according to the amendments.
- The amendments will go into effect on Jan. 1.
- Crypto miners flocked to Kazakhstan after China cracked down on the industry last year. The central Asian country once had an electricity surplus, but since the influx of crypto miners, the national grid has been struggling to meet demand. The government shut off power to crypto mines in January.
- CoinDesk has earlier reported that Kazakhstan has been trying to root out mining operations that don't have proper licensing to reduce the load on the country's energy grid. In March, Kazakhstan announced the closure of 106 mines, seizing 67,000 machines worth $193 million. In May, the government required crypto miners to register their operations with authorities.
- At the same time, Kazakhstan has been trying to bring crypto exchanges to Kazakhstan Nur-Sultan, previously called Astana and the capital city of Kazakhstan. The nation aims to test a pilot project for the creation and operation of cryptocurrency exchanges in the Astana International Financial Centre (AIFC), which was founded in 2018 with the goal of becoming a Central Asian financial hub.
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