Authorized crypto mining businesses have already taken a third of their coin minting hardware out of Kazakhstan, according to the country’s mining association. This news is coming amid power shortages and tax increases that will drive miners from Central Asia.
Bitcoin miners start pulling machines out of Kazakhstan
Kazakhstan-licensed mining firms have moved around 30% of their equipment. Forklog was informed by Alan Dorjiyev, President of Kazakhstan’s National Association of Blockchain and Data Center Industry.
He noted that miners were affected by ongoing energy supply issues and an anticipated tax rise. His organization represents major companies involved in the extraction of digital currencies accounting for 70% of Kazakhstan’s crypto mining sector.
The report quotes legislative documents indicating that Kazakhstan’s parliament prepares to impose on miners a tax of 10 tenge (approx. $0.02 per kWh of electricity produced from domestic energy resources, and $5 per kWh imported.
If lawmakers approve the changes, electricity from renewable and natural gas will now be charged at 3 tenge per unit. Authorities in Nur-Sultan imposed a 1 tenge surcharge ($0.0023 at that time) for every kWh of electricity needed to create cryptocurrencies.
Kazakhstan became a mining hotspot following China’s decision to launch a nation-wide crackdown on the industry in May, and largely due to its capped electricity rates. The country was initially open to mining companies. However, the growing power gap has been attributed to their energy-intensive operations.
In order to deal with shortages, government increased imports of Russian Federation electricity and closed down legal mining farms during winter blackouts. The President Kassym Jomart Tokayev instructed the Ministry of Energy and the Financial Monitoring Agency to pursue illegal miners.
Dorjiyev further commented that the country is gradually becoming an “unfavorable jurisdiction for the crypto mining business.” He also warned that Kazakhstan will lose its leading position in terms of the amount of computing power it controls in the bitcoin network. As of August 2021, the country’s share in the global hashrate had reached 18%, second only to that of the United States.
To quell protests over rising fuel prices in early January, Tokayev’s administration temporarily closed down banks and restricted access to the internet. This also had an impact on the mining sector. Some mining firms have been forced to move to the United States due to political instability and disruptions to power supplies.
What do you think about the potential for another significant migration of crypto-miners due to Kazakhstan’s challenges? Leave a comment below.
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