- The Tax Code of Kazakhstan has been amended by a law signed by the president to subject cryptocurrency miners to a higher tax rate.
- After China forbade cryptocurrency mining, Kazakhstan experienced a significant influx of miners.
- This caused Kazakhstan to experience an energy crisis, which forced the government to raise taxes on cryptocurrency miners.
The country’s law “On Taxes and Other Mandatory Payments to the Budget” has been amended, and a supplemental law that improves the application of Kazakhstan’s Tax Code has also been signed by President Tokayev. Differentiated tax rates for crypto mining are expected to be introduced under the revisions. According on the typical cost of electricity required to mine coins throughout a specific tax period, exact fees will be computed.
The new measure changed the country’s tax and other mandatory budget-related laws. The lowest tax rate is 1 Khazakstani tenge (about $0.002) per kilowatt-hour, and it rises in accordance with the quantity of power used for mining during a given taxation period.
Despite having the lowest tax rate, mining farms that use renewable energy sources must nevertheless pay 1 tenge per kilowatt-hour under the new tax law.
If a miner paid 25 tenges or more per kWh, the price per kilowatt-hour (kWh) starts at one Kazakhstani tenge ($0.002 at the time of writing), and if the price per kWh was between 5 and 10 tenges, the price per kWh might reach 10 tenges. Crypto farms that consumed electricity at a cost-neutral rate of 1 tenge per kWh from renewable sources are eligible for the lowest tax rate. As a result of China’s decision to crack down on the industry in May 2021, the country experienced growing power deficits in 2021, which led to the introduction of the surcharge on January 1 of 2022.
Following the energy crisis, Kazakhstan changed its mind and decided to be less lenient toward the miners. The county switched off the power to the miners in January 2022 in order to survive the energy crisis. The nation’s lawmakers proposed new legislation the following month to deter miners in the area. The latest suggestion suggested taxing cryptocurrency mining equipment similarly to gambling equipment.
Kazakhstan also made an effort to reduce cryptocurrency mining, shutting down mining operations throughout the country’s regions and placing restrictions on electrical supplies during the chilly winter months. Some businesses were obliged to shift to other mining hubs or export a sizable percentage of their equipment as a result of the actions.
Kazakhstan presently has the third-highest monthly hashrate, according to the Cambridge Bitcoin Electricity Consumption Index.