Kazakhstan, the world's third-largest market for Bitcoin mining hashrate, is facing complaints from local cryptocurrency mining operators about high energy prices. Eight major mining operators in Kazakhstan, including BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom, and Kinur Invest, have penned an open letter to President Tokayev expressing their concerns.
In the letter, they describe the cryptocurrency mining industry in Kazakhstan as being in a "very painful situation" due to the high energy costs. The operators claim that all major players in the industry have suspended their operations and plan to cease activities in the country entirely by the end of the year. They argue that this situation undermines the government's efforts to regulate the cryptocurrency industry, especially mining.
The root of the problem, according to the letter, is the decision to increase energy taxes on crypto miners. The operators believe that these taxes have caused Kazakhstan to lose its standing among cryptocurrency mining leaders like the United States, Russia, and China. Without urgent government intervention, they warn that the digital mining industry in Kazakhstan will disappear.
Kazakhstan introduced a tax on cryptocurrency mining based on electricity consumption starting from January 1, 2022. This move was prompted by concerns over cryptocurrency miners' under-taxed use of the national power grid. Even though electricity costs about $0.067 per kilowatt-hour (kWh) in Kazakhstan, significantly lower than the pre-tax average of $0.12 per kWh in the United States, the operators argue that the tax situation is detrimental to the industry. In 2022, Kazakhstan reportedly collected around $7 million in tax payments from cryptocurrency mining entities.
