Bitcoin Miners in Kazakhstan Will Be Required to Pay Taxes Related to the Bitcoin Price
Everybody enjoys it when Bitcoin’s price increases. However, for Bitcoin miners in Kazakhstan, this might mean more taxation in the near future.
Kazakhstan was formerly considered an appealing place for Chinese Bitcoin miners after the government’s ban on all BTC mining activities, but the country now seems to be on the verge of enacting new levies that will have a detrimental effect on the business.
On April 14, Alibek Kuantyrov, Minister of National Economy, said at a government briefing that his team is developing a tax proposal that will tie tax payments to the value of mined coins.
According to Kuantyrov’s comments, which were originally published by ForkLog, this would benefit the nation financially in terms of tax collection, as it will result in a boost to the state budget. This move, however, may prompt many miners to look into other nations, such as El Salvador, where the mining tax will be a flat 10% to fund the building and operation of Bitcoin City.
“We are discussing raising the tax burden on miners, and we are also exploring tying the tax rate on miners to the cryptocurrency’s worth. If the bitcoin market increases, it will benefit the economy.”
Kazakhstan Is No Longer An Attractive Location For Crypto Miners
Initially, the Kazakstan government welcomed miners with open arms; but, a few months later, this position shifted.
The nation moved from supplying some of the cheapest energy in the world for mining to imposing a 20 cents per kWh mining tax – in one month, the energy cost increased by ten – claiming that mining energy consumption had surged enormously.
However, in addition to the tax, the authorities began closing down several mining farms, transforming the so-called paradise into a nightmare for the bitcoin mining business.
Denis Rusinovich, a co-founder of Cryptocurrency Mining Group (CMG), a firm operating in Kazakhstan since 2017, said that the nation “went from being heroes to nothing” in a matter of moments, criticizing the government’s regulatory efforts.
Alan Dorjiyev, Director of Kazakhstan’s National Association of Blockchain and Data Center Industry, recently informed a local news site that the government was exploring a bitcoin-linked energy tax.
“A gradation is being considered: for example, one taxon transactions up to $40,000 [bitcoin price], another on transactions over $40,000, and so on. However, this is currently in the debate stage.”
Conducting mining activities in the country may be counterproductive at the moment, given the possibility of another increase in the power tariff at any time, let alone the repeated power outages that miners have been experiencing in many locations since January and Dorjiyev claims have not been fully restored.