Kazakhstan’s Government Earns $1.5M In Cryptocurrency Mining Fees In Q1 Of 2022
In the first quarter of 2022, the government of Kazakhstan collected 652 million Kazakhstani tenges ($1.5 million) in fees from cryptocurrency miners.
According to a recent government report, despite opposition to a new crypto mining tax regime launched in April, an internet outage, public upheaval, and a heavily carbonized energy infrastructure, the Kazakhstani government has received $1.5M in fees from crypto mining businesses.
“The fee is charged for the actual amount of electrical energy consumed in the implementation of activities,” according to the report, which breaks down the rates by location. Miners are paid with new coins for assisting with the network’s security, which is a computationally complex process that consumes a lot of electricity.
The top three fee revenue districts in Kazakhstan are Nur-Sultan, the country’s capital and administrative centre, with 277.3 million tenges, West Kazakhstan, with 143.1 million tenges, and Aktobe, the country’s fourth-largest city, with 48.9 million tenges. It is worth mentioning that the money are part of the “republican” or national budget, therefore the regions that get the earnings may not be the same as the regions that house the crypto mining farms.
Following calls from Kazakhstan’s vice-minister of energy, Murat Zhurebekov, to crack down on “grey miners,” those who operate outside the law, the government decided to implement a 1 tenge ($0.0023) per kWh surcharge in 2022, which some mining companies saw as a way to legitimize operations and remove from a “grey list.”
The hazards of remaining in the country became too big for some businesses. Wired reported earlier this year that Bitfufu would shut down in December 2021, followed by three other unnamed companies.
But it was far from an exodus. “We expected something similar to what happened when they announced the China ban, where our phones was ringing off the hook.” And we haven’t seen that out of Kazakhstan yet,” said Luxor Technologies’ Alex Brammer.
After being banned from China in May 2021, Kazakhstan offered a safe haven for displaced miners looking for cheaper power for 87,849 computers. However, it quickly found itself unable to meet surging demand for its mostly coal-based electrical system.
Noticing this, the authorities committed to cut grid demand by turning off electricity to miners and seeking extra supplies from Russia’s eastern neighbor Inter-RAO, a Moscow-based energy business.
Glasgow University’s Professor Luca Anceschi told the Financial Times:
“Certainly, having input of electricity from Russia can address the problem in the short-term, but I think that there is a big discussion to be had about what kind of energy policy Kazakhstan is actually pursuing,”
Anceschi feels that blaming grid instability on “grey miners” obscures the true difficulties, which include a lack of grid maintenance and an inability to transport electricity from the north to the south. The country’s grid operator stated that maintenance and repairs would begin.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Kazakhstan’s Government Earns $1.5M In Cryptocurrency Mining Fees In Q1 Of 2022
In the first quarter of 2022, the government of Kazakhstan collected 652 million Kazakhstani tenges ($1.5 million) in fees from cryptocurrency miners.
According to a recent government report, despite opposition to a new crypto mining tax regime launched in April, an internet outage, public upheaval, and a heavily carbonized energy infrastructure, the Kazakhstani government has received $1.5M in fees from crypto mining businesses.
“The fee is charged for the actual amount of electrical energy consumed in the implementation of activities,” according to the report, which breaks down the rates by location. Miners are paid with new coins for assisting with the network’s security, which is a computationally complex process that consumes a lot of electricity.
The top three fee revenue districts in Kazakhstan are Nur-Sultan, the country’s capital and administrative centre, with 277.3 million tenges, West Kazakhstan, with 143.1 million tenges, and Aktobe, the country’s fourth-largest city, with 48.9 million tenges. It is worth mentioning that the money are part of the “republican” or national budget, therefore the regions that get the earnings may not be the same as the regions that house the crypto mining farms.
Following calls from Kazakhstan’s vice-minister of energy, Murat Zhurebekov, to crack down on “grey miners,” those who operate outside the law, the government decided to implement a 1 tenge ($0.0023) per kWh surcharge in 2022, which some mining companies saw as a way to legitimize operations and remove from a “grey list.”
The hazards of remaining in the country became too big for some businesses. Wired reported earlier this year that Bitfufu would shut down in December 2021, followed by three other unnamed companies.
But it was far from an exodus. “We expected something similar to what happened when they announced the China ban, where our phones was ringing off the hook.” And we haven’t seen that out of Kazakhstan yet,” said Luxor Technologies’ Alex Brammer.
After being banned from China in May 2021, Kazakhstan offered a safe haven for displaced miners looking for cheaper power for 87,849 computers. However, it quickly found itself unable to meet surging demand for its mostly coal-based electrical system.
Noticing this, the authorities committed to cut grid demand by turning off electricity to miners and seeking extra supplies from Russia’s eastern neighbor Inter-RAO, a Moscow-based energy business.
Glasgow University’s Professor Luca Anceschi told the Financial Times:
“Certainly, having input of electricity from Russia can address the problem in the short-term, but I think that there is a big discussion to be had about what kind of energy policy Kazakhstan is actually pursuing,”
Anceschi feels that blaming grid instability on “grey miners” obscures the true difficulties, which include a lack of grid maintenance and an inability to transport electricity from the north to the south. The country’s grid operator stated that maintenance and repairs would begin.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
Patrick
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