Licensed crypto mining companies have urged the government in Kazakhstan to revise its taxation policy regarding the sector, which they say is in dire straits. The largest mining firms plan to leave the Central Asian nation by the end of this year, warned the members of the industry.
Miners Criticize Kazakhstan Government's 'Unbalanced' Tax Rules
Crypto mining businesses, authorized to operate in Kazakhstan, have complained about the high production costs since the government limited their access to subsidized electricity and imposed a progressive scale for a surcharge they are required to pay for the power they use.
In an open letter to President Kassym-Jomart Tokayev, eight companies involved in the minting of digital currencies called for a revision of the applicable tax rules. Warning authorities that Kazakhstan's mining sector is now "in extremely dire straits," they also revealed:
Today, all the largest representatives of the industry have suspended their activities and plan to completely cease their business in the Republic of Kazakhstan by the end of the year.
The miners highlight that their activities are carried out under license, their data centers are legally connected to the power grid and their computing equipment is duly registered. A transparent mechanism to determine the income base for corporate taxation has been put in place, too.
The crypto firms also point out that they have voluntarily cooperated with the government in its attempt to regulate the market but noted that the positive effect of this is being undermined by the "ineffective and unbalanced" tax policy, Kazakhstan's Digital Business news portal reported, also quoting the authors of the letter as stating:
As a result, our country has lost its share of the global volume of digital mining — from 14.03% in 2022 to 4% in 2023.
The floating rate of the electricity surcharge, which can reach 26 tenge (over $0.05) per kWh depending on the base price, essentially destroys the industry, the crypto miners concluded. The cost of the electrical energy accounts for up to 80% of the value of mined digital assets, they added.
Kazakhstan became a crypto mining hotspot in the aftermath of China's crackdown on the industry two years ago. The influx of miners was blamed for the country's growing power deficit. Pressed by increasingly stricter regulations and power restrictions, mining companies started exiting the country. Chinese mining giant Canaan announced in August it had temporarily shut down approximately 2 exahash per second (EH/s) of its computing power in Kazakhstan since July.
Where do you think will most crypto miners relocate if they leave Kazakhstan? Share your thoughts on the subject in the comments section below.
Source: Bitcoin.com
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