Kazakhstan’s president orders higher taxes on cryptocurrency mining

Kazakhstan’s President Kassym-Jomart Tokayev, at a government meeting, ordered higher taxes on cryptocurrency mining and the identification of all mining farms. Local media report local media.

In his words, the ‘socio-economic effect’ of cryptocurrency mining is minimal, while the activity places a substantial load on power networks. Meanwhile, ‘gray miners’ use electricity at very low tariffs and do not pay taxes on imported equipment.

Tokayev ordered the Financial Monitoring Agency to identify all mining farms, verify tax and customs issues, “study the contracts under which the technical conditions were obtained, as well as other aspects of the activity”. The agency must report by March 19.

The president stressed that the state is not against licensed miners operating under established tariffs.

He also said there is a need to raise the tax on mining:

“The current rate—1 tenge per 1 kWh—is negligible. I task the government with working out a multiple increase of this tax in the shortest possible time. The government should develop a full package of measures to regulate and develop digital mining. I expect results by April 1.”

Earlier, First Deputy Finance Minister Marat Sultanzagiev said about raising the tax on miners. Kazakh authorities are considering increasing the electricity tax from 1 to 5 tenge per kWh:

“In addition, introduce a separate tax regime for digital mining — this is equipment for digital mining (10 МРП), video cards — 1 МРП, other equipment on the list — 10 МРП. Per month. The report will be quarterly, and payments will also be quarterly.”

The Kazakhstan Blockchain Technologies Association told ForkLog that, given the long-standing restrictions on mining companies’ access to electricity, even paying the current tax is in doubt:

“Beyond the tax issue, we regard it as a priority to resolve the electricity supply issue. Without electricity, this business will not operate, and consequently there will be no payments.”

Earlier, in June 2021, Kassym-Jomart Tokayev signed the law, which provided for the introduction of an additional fee for cryptocurrency mining activity.

In September, local authorities proposed restricting miners to combat electricity shortages.

In November, Tokayev ordered to ensure “urgent” legislative regulation of the industry to curb the activities of the ‘gray miners’.

In January 2022, mining farms located in Kazakhstan were disconnected from electricity, later the restrictions were extended. Supplies have not resumed to this day.

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