In the first 11 months of 2023, the Kyrgyz government collected a notable 78.6 million soms (about $883,000) in taxes from cryptocurrency miners, as reported by local media quoting the Ministry of Finance. This figure marks a substantial increase from the previous year's tax revenue from the same sector.
Throughout 2023, the amount of tax collected from cryptocurrency mining in Kyrgyzstan varied significantly, ranging from a low of 738,000 soms ($8,284) in February to a peak of 11.6 million soms ($130,212) in August. By November, the revenue stabilized at 7.6 million soms ($85,767), following the August high. Despite a bustling past, currently, only a single cryptocurrency mining company is officially registered and operating in the country.
In comparison, the total tax revenue from cryptocurrency mining for the initial 11 months of 2022 was significantly lower, amounting to just 11.1 million soms ($133,200). The taxation framework in Kyrgyzstan imposes a 10% tax on the cost of electricity consumed for mining, which includes VAT and sales tax. The government points out that Kyrgyzstan's abundant water resources, like glaciers and rivers, totaling over 35,000 kilometers, remain largely untapped, though they provide a crucial source of hydroelectric power for cryptocurrency mining.
July 2023 saw a significant development when Kyrgyz President Sadr Japarov sanctioned the establishment of a cryptocurrency mining facility at the Kambar-Ata-2 hydroelectric power plant. Notably, cryptocurrency miners in Kyrgyzstan are charged five times the electricity rate compared to the general public.
However, 2023 posed challenges for cryptocurrency production due to low water levels in dams and restrictions arising from power agreements with neighboring countries. These issues forced miners and sometimes even the government to import electricity. Despite these hurdles, by early October 2023, the cryptocurrency mining industry had already consumed 17 million kilowatt-hours of electricity. While cryptocurrency trading is legal in Kyrgyzstan, the broader circulation and regulation of cryptocurrencies in the country remain unregulated, making the energy consumption by miners a topic of ongoing debate.
