Kazakhstan is benefiting from the crypto mining boom to levy new taxes on bitcoin mining

Kazakhstan is becoming a hotspot for crypto mining, especially after the crypto mining crackdown in neighboring China. The Kazakh authorities want to capitalize on this crypto mining boom in order to impose a new tax on Bitcoin mining from January 2022.

Kazakhstan is taking advantage of the crypto mining boom to impose a new tax on bitcoin mining

Miners speak out against new crypto mining laws in Kazakhstan, which account for 6.17% of Bitcoin’s global hash rate, and see interest in regulatory action in the neighboring country.

Although cryptocurrencies already exist as “unsecured digital assets” under Kazakh law, their circulation in the country is prohibited. In June 2020, “Digital Mining” was also included in the law, from April 2020 Kazakhstan will account for 6.17% of the global hash rate of Bitcoin, according to the Cambridge Bitcoin Electricity Consumption Index.

Changes to the tax law have been presented to the Senate that proponents believe will give a boost to Kazakhstan’s mining sector. In 2020, crypto mining brought in nearly $ 10 billion in tax changes (more than $ 23 million) and $ 160 million in export revenue, according to the local release.

According to the Ministry of Digital Development, Innovation and Aerospace Industry, there are 17 digital mining farms in the country. Back in February, one of the ministerial officials announced a plan to “bring” 1% of global crypto revenues to Kazakhstan.

There is currently no special tax for miners, but MP Albert Rau of Majilis has proposed an amendment that introduces a new tax for mining operations. The proposed new tax would be 1 tenge for every 1 kilowatt hour of electrical energy used in digital mining.

This measure will come into force on January 1, 2022 if it is adopted in its current form.

The main goal of the bill is to “get this sector out of the shadows,” said Rau.

According to the bill, the changes would allow the agency to regulate the operation of miners.

Information on cryptocurrency miners is collected quarterly by the “Authoritative Information Security Authority” to enable mining farms to be found. Thanks to the high and stable daily electricity consumption, they can also be found by electrical engineers if necessary, says Rau.

Meanwhile, miners protested the new tax. Back in May, Alan Dordzhiev, chairman of the Blockchain and Data Center Industry Association in Kazakhstan, said that miners would have to pay billions of dollars in taxes.

Kazakhstan is emerging as a mining hotspot as China runs a campaign to punish electronic money. The drastic crackdown on mining activities in this billion-inhabitant country has resulted in most of the Bitcoin mining centers being closed. Under increasing pressure, miners were forced to relocate their machines and find new land. Kazakhstan is a promising country that is attracting the attention of many Chinese miners as electricity is relatively cheap and cryptocurrency regulations are still unclear.

However, the urgency of passing the changes alarms investors who may be leaving the industry and exposing foreign investors to legal risk as they lose interest in further reinvesting in the industry.

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