Local Crypto-Mining Operators in Kazakhstan Complain About High Energy Prices
Several major cryptocurrency mining operators in Kazakhstan have written an open letter to President Kassym-Jomart Tokayev, expressing their concerns about the high energy prices in the country. The letter states that the Kazakh crypto mining industry is facing a distressful situation due to the expensive energy costs. As a result, these companies have suspended their operations and plan to completely cease their business in Kazakhstan by the end of the year.
High Energy Prices Derail Government’s Efforts to Regulate Crypto Mining
The executives who signed the letter believe that the high energy prices hinder the government’s efforts to regulate the crypto industry, especially mining. They argue that the decision to raise taxes on energy for crypto miners has led to Kazakhstan losing its position as one of the leading countries in crypto mining. The letter warns that urgent action is needed; otherwise, the digital mining industry in Kazakhstan will cease to exist.
Taxes on Digital Mining Introduced in 2022
Kazakhstan introduced taxes on digital mining at the beginning of 2022. The taxes are based on electricity consumption by mining entities and were implemented due to national frustration with undertaxed usage of the power grid by crypto miners. Despite the taxes, the cost of taxed electricity for miners in Kazakhstan remains significantly lower than in countries like the United States.
Hot Take: Crypto Mining Industry Threatened by High Energy Prices
The high energy prices faced by crypto-mining operators in Kazakhstan pose a significant threat to the industry’s existence in the country. With major players suspending their activities and planning to exit Kazakhstan, urgent measures are needed to address this issue. The government’s decision to raise taxes on energy for crypto miners has contributed to this situation and hindered its efforts to regulate the industry. If no action is taken, Kazakhstan risks losing its position in the global crypto mining market and the industry may face extinction.
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