- Kazakhstan’s crypto miners have paid taked amounting to 3.07 billion tenges (approximately $7 million) in 2022
- In January 2022, Kazakhstan confirmed that crypto miners would be taxed based on their electricity consumption.
- On February 6, 2023, President Kassym-Jomart Tokayev signed the law “On Digital Assets”.
According to local reports, Kazakhstan has reportedly collected 3.07 billion tenges (approximately $7 million) in taxes from individuals involved in digital mining operations within the country in 2022. The total fees collected by the government as of April 27, 2023, amount to 240 million tenge (approximately $541,000). However, this amount is significantly less than the 652 million tenge (around $1.5 million) collected in fees during the first quarter of 2022.
According to reports, the increase in revenue for 2022 can be linked to the recent changes in laws governing cryptocurrency mining in Kazakhstan.
The introduction of digital mining fees
In 2021, following China’s crackdown on crypto mining, many mining operators started relocating to Kazakhstan, which has become an attractive destination due to its low electricity rates and relatively crypto-friendly laws.
The sudden influx of mining has strained the energy supply in the country because of the strain on the country’s power grid and caused frequent outages caused by the increase in mining activity. This forced the government to take steps to regulate the industry, including the introduction of digital mining fees and the signing of a law on digital assets in February 2023.
According to the reports, the State Revenue Committee of the Ministry of Finance mandates individuals involved in digital mining to remit digital mining fees. Kazakhstan implemented a payment system for digital mining on January 1, 2022, based on the quantity of electricity consumed.
This legislation was introduced due to growing concerns about the low taxes paid by crypto miners in Kazakhstan despite their high usage of the country’s power grids.
The President signed the law “On Digital Assets” on February 6, 2023. It states:
“The purpose of the state regulation in the field of digital assets is the production and circulation of digital assets for the economic development and competitiveness of the Republic of Kazakhstan, the development of digital mining activities in the Republic of Kazakhstan.”
Binance Signs MoU
Binance, the world’s largest cryptocurrency exchange, has recently signed an MoU with the country’s Financial Monitoring Agency. This is part of the exchange’s “Global Law Enforcement Training Program,” which aims to assist law enforcement agencies worldwide in preventing financial crimes in the digital asset industry, including in Kazakhstan.
The CEO of Binance, Changpeng Zhao, tweeted:
“This is a first for the industry. The program is designed to help law enforcement detect financial and cyber crimes and assist in prosecuting bad actors who exploit digital assets.”
The world’s biggest landlocked country has continued to maintain its position as the third most significant contributor to the Bitcoin mining hash rate after it surpassed Russia in February 2021. According to the Cambridge Centre for Alternative Finance data, Kazakhstan currently contributes to over 13.22% of the total Bitcoin hash rate. This means that the country is sitting right after the leaders in the industry, the United States, which contributes to over 37.84%, and China, which has a 21.11% share in the mining sector.
Kazakhstan’s dynamic stance on cryptocurrency mining taxation and regulation reflects its government’s aim for equilibrium. It prioritizes promoting economic growth while ensuring fiscal responsibility.
The country’s prompt action towards the influx of foreign mining operators and the implementation of a tax system based on electricity consumption showcases its dedication to managing the impact of the digital currency industry on its economy and power grid.
