Crypto mining companies in Kazakhstan are currently facing a major crisis, resulting from what they see as excessive tax burdens imposed by the Kazakh government. This situation is seriously jeopardizing their profitability, prompting them to consider leaving the Central Asian country by the end of the year.
Kazakhstan’s crypto miners intend to leave due to exorbitant taxes
While Kazakhstan had emerged as a major hub for the Mining crypto industry following the Chinese crackdown two years ago, it now seems to be losing its appeal to miners.
The crisis is indeed hitting the crypto mining industry in Kazakhstan hard, and companies operating in accordance with the country’s legislation are experiencing a production costs.
This increase is the result of government restrictions on their access to electricity.
Faced with this situation, eight mining companies have recently sent a letter to the president, Kassym-Jomart Tokayev, arguing for a revision of current tax rules.
In this letter, these companies warned of the extreme precariousness of the mining sector in Kazakhstan. They pointed out that all the main companies in the industry had suspended operations and were considering leaving Kazakhstan by the end of the year.
The miners insisted that their operations were conducted in compliance with current regulations. Their data centers were legally connected to the power grid, and their IT equipment was duly registered.
However, despite their voluntary cooperation with the government to regulate the market, these companies feel that current tax policies, deemed inefficient and unbalanced, cancel the positive effects of this collaboration.
The consequences of high taxation already visible on the market
Little by little, the country is losing its supremacy on the world market for mining crypto, from 14.03% in 2022 to 4% in 2023.
According to the miners, the main reason behind this decrease lies in the fluctuating electricity tariff structure, with costs rising by up to 26 tenges (more than $0.05) per kWh.
Cryptocurrency miners estimate that this electricity-related financial burden represents up to 80% of the value of the digital assets they mine, putting the entire industry at risk. If this trend continues, Kazakhstan could well lose its place as a world leader in the mining industry for good.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.