Following the exodus of Chinese miners, Kazakhstan had become a hotbed for Bitcoin (BTC) mining. But will this soon be the end? The industry is facing bans, and operators could face a huge tax increase.
Will Kazakhstan reverse its open to minors policy
Kazakhstan has become a hotbed for Bitcoin miners… At least according to the latest data available from the CBECI’s analytics centre, which placed the country second only to the US last August:
Bitcoin network hashrate distribution (Source: CBECI)
It accounted for 18% of the world’s hashrate at the time, a significant share compared to France’s meagre 0.20%, for example. Kazakhstan had managed to attract miners thanks to particularly low electricity rates, and a regulatory environment that gave them a free hand.
But this is changing. Already, the Minister of Energy expressed his dissatisfaction last October. He felt that the mining machines were taking electricity from a grid that was already struggling to supply the entire population.
Miners also faced a new tax in early 2021. They now pay 1 tenge (KZT) per kilowatt hour of electricity, or about 0.002 euro at the current rate. This is the amount that could increase drastically in the future.
In Kazakhstan, new taxes for miners
According to a publication of the local media Kazinform, the Kazakh government would indeed consider multiplying the tax by five, from the equivalent of 0.002 euros to 0.012 euros. The difference would be considerable for miners, and could put many in economic difficulty.
In addition to this, Marat Sultangaziev, Kazakhstan’s Deputy Finance Minister, has suggested that miners should pay a monthly tax on their equipment. Even if they do not use it during the period. Another problem is that local miners have already suffered power cuts throughout January, and are now facing limitations.
This really isn’t exactly right.
Should the Kazakhstan government impose such fees when they might protect the workers simply put? miner tax Bitcoin– Ayantha Kumarasinghe (@ayanthamaxi) February 9, 2022
A new exodus to come
Miners in Kazakhstan may therefore relocate to territories where mining is less restricted by the government. We already know that Russia was the third largest territory in terms of hashrate produced this summer. It could therefore be a land of opportunity for Kazakh miners.
Despite the hesitations of the Central Bank of Russia, President Vladimir Putin has indeed judged that the country has a “competitive advantage” in cryptocurrency mining. So doors could be opening on that front.
