April 19, 2024
Kazakhstan's crypto mining industry faces crisis
Latest Cryptocurrency News

Prominent Crypto Miners in Kazakhstan Urge President to Address Energy Price Crisis

Crypto-mining operators in Kazakhstan, the world’s third-largest Bitcoin mining hash rate market, have raised concerns about exorbitant energy prices with the country’s president.

According to local reports, a group of eight prominent cryptocurrency mining operators, including BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom, and Kinur Invest, have jointly penned an open letter to President Kassym-Jomart Tokayev. The letter outlines the dire situation faced by the Kazakh crypto-mining industry due to the high energy costs incurred by miners. The letter states that, as of today, all major industry players have suspended their operations and are planning to completely exit the Republic of Kazakhstan by year-end.

The signatories to the letter argue that the pricing issue is hindering the government’s efforts to regulate the broader crypto industry and mining in particular. They attribute the problem to the decision to increase energy taxes for crypto miners. As a result of these taxes, Kazakhstan has already slipped from its position as a leading crypto mining hub, falling behind countries like the United States, Russia, and China. The letter warns by saying that if the government fails to take immediate action, the digital mining industry in the Republic of Kazakhstan will cease to exist.

The country implemented taxes on digital mining on January 1, 2022, based on the electricity consumption of mining entities. This move was prompted by growing national frustration over the undertaxed usage of the national power grid by crypto miners.

Even at the highest tariff, 1 kilowatt-hour (kWh) of taxed electricity in Kazakhstan costs miners approximately $0.067, which is significantly lower than the average of $0.12 per kWh in the United States before any taxes. According to data from the Kazakh government, they collected approximately 3.07 billion tenges ($7 million) in tax payments from crypto mining entities in 2022.

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