Eight Kazakhstan-based cryptocurrency mining companies sent an open letter to President Kassym-Jomart Tokayev about the precarious state of the industry in the country. This was reported by Digital Business.
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Miners expressed concern about high electricity tariffs and asked the head of state to review the tax policy.
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“As of today, all the major players in the sector have suspended their activities and plan to completely cease their business in the Republic of Kazakhstan by the end of the year,” the document says.
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Among the signatories were BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Kinur LLC, Green Power Solution Ltd., VerCom and Kinur Invest.
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The authors noted that in Kazakhstan there was adopted “the most advanced in the world” legislation regulating the market for digital assets, including the mining sector.
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On February 6, Tokayev signed a document obliging miners to license their activities, along with related regulations. The decrees came into force on 1 April.
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“The market has consciously taken these steps to protect the power system from unscrupulous participants, and with a view to ensuring the sustainable development of the digital mining industry on the basis of the principles of transparency and openness,” the Kazakh companies stressed.
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However, in their view, the whole positive momentum of regulation is being undermined by the prohibitive taxation of the sector. The authors noted that the Ministry of National Economy of Kazakhstan has failed to grasp the specifics, as well as the cost of mining.
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“In 2023, a differentiated rate of up to 26 tenge per kWh was introduced, the deleterious effect of which essentially destroys the industry and does not allow miners to optimize their activities to reduce costs. Electricity accounts for up to 80% of the cost of digital assets,” they explained.
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As a result of this policy, Kazakhstan’s share of global cryptocurrency mining has fallen from 14% in 2022 to 4% in 2023.
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In August, Canaan temporarily halted its Bitcoin mining capacity in the republic after the mandatory licensing requirements came into force.
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Earlier, ForkLog reported that Kazakh miners paid $6.7 million in taxes for 2022.