Kazakhstani cryptocurrency miners will have to start paying new fees at the start of 2023 for the electricity they need to create a digital currency. The 2021 addition of a surcharge, which can now be significantly higher than the initial tax, is now based on the cost of the electricity used by bitcoin farms.
New Year Brings Higher Costs for Companies Mining Crypto in Kazakhstan
A progressive scale is being used to determine the electricity charge imposed on cryptocurrency miners in Kazakhstan as of January 1. The initial universal surcharge of 1 Kazakhstani tenge ($0.002) per kilowatt-hour (kWh), first implemented in the summer of 2021, can now reach 25 tenges (more than $0.05).
According to the source and cost of the electrical energy used to extract digital currencies, the rate varies in each situation. In July 2022, President Kassym-Jomart Tokayev signed a bill amending the country’s Tax Code, which included a new system for determining tariffs.
The average cost of electricity a miner uses over the course of a particular tax period serves as the levy’s base. According to the most recent tariff scale cited by Interfax Kazakhstan and other local media, if a company paid 24 tenges or more per kWh, a minimum fee of 1 tenge would be charged.
Additionally, with no consideration for the price of electricity, crypto farms using renewable energy will be given the lowest rate. Additionally, the tax burden increases with the cost of the energy produced from other sources. The reports specify that the cost per kWh may reach 25 tenges.
Following China’s crackdown on the sector in 2021, Kazakhstan became a mining hotspot, luring cryptocurrency miners with its cheap, subsidized electricity rates. The country’s expanding power deficit has been attributed to the influx of mining firms.
As part of their efforts to regulate the industry, the authorities in Nur-Sultan have been going after illegal mining farms. A clause in a new bill passed by Kazakhstan’s parliament in December aims to force miners to purchase extra electricity in a market that is under government control.
Mining is restricted to only registered companies under an earlier legislative proposal that was made by a group of lawmakers in October. As long as they have agreements with duly accredited local data centers, it also permits non-resident entities to mine in the nation.