Miners Call for Tax Policy Revision
Licensed crypto mining companies in Kazakhstan are urging the government to reconsider its taxation policy, claiming that the industry is facing significant challenges. The largest mining firms have announced their plans to leave the country by the end of this year.
Complaints About High Production Costs
Crypto mining businesses operating in Kazakhstan have raised concerns about the rising production costs. They argue that the government’s decision to limit their access to subsidized electricity and implement a progressive scale for surcharges has significantly impacted their operations.
Open Letter to President Tokayev
In an open letter addressed to President Kassym-Jomart Tokayev, eight companies involved in digital currency mining have called for a review of the current tax regulations. They warned that the mining sector in Kazakhstan is currently facing dire circumstances and revealed that major players in the industry have already suspended their activities with plans to completely cease operations by the end of the year.
Operating Under License
The miners emphasize that they operate under valid licenses, their data centers are legally connected to the power grid, and their computing equipment is duly registered. Additionally, a transparent mechanism for determining corporate taxation based on income has been established.
Voluntary Cooperation with Government
The crypto firms acknowledge their voluntary cooperation with the government in its efforts to regulate the market. However, they argue that the positive impact of this collaboration is undermined by an “ineffective and unbalanced” tax policy. According to Kazakhstan’s Digital Business news portal, the companies state that as a result, the country’s share of global digital mining has decreased from 14.03% in 2022 to 4% in 2023.
Impact of Electricity Surcharge
The crypto miners highlight the floating rate of the electricity surcharge, which can reach 26 tenge (over $0.05) per kWh depending on the base price. They argue that this surcharge is detrimental to the industry, as the cost of electrical energy accounts for up to 80% of the value of mined digital assets.
Kazakhstan’s Crypto Mining History
Following China’s crackdown on the crypto mining industry two years ago, Kazakhstan became a popular destination for miners. However, the influx of miners led to an increasing power deficit in the country. As a result, mining companies faced stricter regulations and power restrictions, prompting many to exit Kazakhstan. In August, Chinese mining giant Canaan announced the temporary shutdown of a significant portion of its computing power in Kazakhstan since July.
Hot Take: Crypto Miners in Kazakhstan Struggle with Taxation Policy
Crypto mining companies in Kazakhstan are facing challenges due to the government’s taxation policy. The high production costs resulting from limited access to subsidized electricity and progressive surcharges have pushed major players in the industry to plan their exit from the country by the end of this year. The miners argue that they operate legally and have cooperated with the government’s regulatory efforts but are hindered by an “ineffective and unbalanced” tax policy. The floating rate of electricity surcharges further exacerbates their difficulties. This situation has led to a decline in Kazakhstan’s share of global digital mining. The country’s history as a crypto mining hotspot is now at risk as companies consider relocating elsewhere.
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