16 Apr Bitcoin Miners in Kazakhstan To Pay Taxes Correlated to BTC Price
Once considered an attractive country for Chinese Bitcoin miners after the country’s crackdown on any BTC mining activity, Kazakhstan now seems to be set to creating new taxes that will negatively impact the industry.
On April 14, the Minister of National Economy, Alibek Kuantyrov, said in a government briefing that his team is working on a tax plan that would link tax payments to the valuation of the mined tokens.
According to Kuantyrov’s statement, first reported by ForkLog, this will help the country financially in tax collection, as it translates into an improvement for the state budget. However, this decision could cause many miners to explore other countries like El Salvador, where the mining tax will be a flat 10% to finance the construction and services of Bitcoin City.
“We are considering increasing the tax burden for miners, at the moment we are also considering linking the tax rate for miners to the value of the cryptocurrency. If the cryptocurrency grows, it will be good for the budget.”
Kazakhstan is Less Attractive For Crypto Miners
Initially, the Kazakstan government welcomed miners with open arms; however, this stance changed a few months later.
The country went from offering one of the cheapest energies in the world for mining to introducing a mining tax of 20 cents per kWh -in one month, the energy cost multiplied by 10- arguing that the energy demand by miners had grown exponentially.
But besides the tax, the government also started shutting down many mining farms, turning the so-called paradise into a headache for de bitcoin mining industry.
Denis Rusinovich, the co-founder of Cryptocurrency Mining Group (CMG), a company operating since 2017 in Kazakhstan, said that from one moment to the next, the country “went from being heroes to nothing,” thus condemning the regulatory measures implemented by the government.
1|6 Kazakhstan #bitcoinmining trying to retaliate position of going from “hero to zero”. Over the last 4 years the community did a massive step in establishing new sector in the country and building strong global position as bitcoin mining hub. >>
— Denis Rusinovich (@DenisRusinovich) October 22, 2021
Bitcoin Bullish? More Taxes!
Alan Dorjiyev, Director of Kazakhstan’s National Association of Blockchain and Data Center Industry, told a local news outlet that the government was considering an energy tax levy correlated to the price of bitcoin.
“A gradation is being considered: for example, up to $40,000 [bitcoin price] one tax, over $40,000 another tax and so on. But this is still at the level of discussions.”
At the moment conducting mining activities in the country could be somewhat counterproductive, considering that at any moment, another increase in the power tariff could be announced, let alone the repeated power outages that miners have been experiencing since January in many locations and which Dorjiyev claims have not yet been fully restored.
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