What Kazakhstan’s new tax regime means for the crypto mining industry
On July 11, the President of Kazakhstan, Kassym-Jomart Tokayev, signed new tax rates for crypto mining operators into law. While these amendments reflect the country’s growing frustration with the undertaxed and non-transparent usage of the national power grid by both foreign investors and domestic perpetrators, the new taxes could hardly be called excluding.
Moreover, they could signal the further adoption and legalization of mining in energy-rich Kazakhstan, making the country and the region an even more attractive destination for miners amid tightening pressure in more established jurisdictions.
The two amendments will come into effect on Jan. 1, 2023, and will tie tax rates to the price mining operators pay for the electricity. Following a progressive scale, an operator will have to pay $0.024, or 10 tenges, of taxes for a kilowatt-hour (kWh) of energy at the lowest price of $0.012–0.024, and $0.0072, or 3 tenges, at the highest of $0.048–0.060 per Kwh. Those who use renewable energy that they produce will face the most favorable conditions of only one tenge per kWh.
These recent amendments are not the Kazakh government’s first attempt to tax the industry. A previous bill was signed by Tokaev on June 29, 2021, and introduced an additional payment of $0.0023, or 1 tenge, at the time for 1 kWh of electricity consumed for mining.
The tax amendments became a landmark in the long and difficult history of Kazakhstan’s relationship with the crypto mining frenzy, which drew a wave of foreign mining operators to the country. By some estimates, more than 87,849 mining machines have been brought to the republic by November 2021. Kazakhstan’s star on the global mining map sparked swiftly after the nationwide crackdown on crypto
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