In 2024, Kyrgyzstan’s revenue from crypto mining taxes decreases by 50%, reaching $535,000.
Despite the global increase in cryptocurrency valuations, Kyrgyzstan experienced a significant decrease in tax revenue from cryptocurrency mining in 2024. The nation, which is renowned for its abundant hydroelectric resources, experienced a 50% decrease in tax receipts from crypto mining in comparison to the previous year.
Kyrgyzstan collected only 46.6 million Kyrgyzstani soms (approximately $535,000) in mining taxes this year, a substantial decrease from the 93.7 million soms ($1.08 million) collected in 2023, according to a report prepared by the Ministry of Economy and Finance.
Early on, the decline was apparent, as revenue experienced a 29.7% decrease in the first seven months of 2024 when contrasted with the same period in 2023.
Cryptominers are subject to a 10% tax on the electricity they consume in Kyrgyzstan, which also includes value-added tax (VAT) and sales tax. This taxation model initially contributed to the increase in revenue, notably in the early phases of 2023.
The country reported a significant increase in mining taxes during that period, collecting 78.6 million soms ($883,000) in the first few months. This figure is significantly higher than the 11.1 million soms ($133,200) collected during the same period in 2022.
The precise causes of the precipitous decline in mining tax revenue are still unknown. Some hypothesize that regulatory uncertainties or diminished mining activity may have played a role.
Additionally, Kyrgyzstan’s hydroelectric power is affordably priced, which has rendered it an appealing destination for cryptocurrency miners. However, recent modifications to energy policies or costs may have affected the sector.
In spite of the decrease in tax revenue, there are numerous proposals worldwide to enhance crypto mining. For instance, in Germany, miners utilize surplus renewable energy to operate Bitcoin operations, which contributes to the stabilization of power infrastructures and the reduction of energy waste.
Countries such as Kyrgyzstan could investigate comparable strategies to stimulate the sector while simultaneously providing economic support.
While Kyrgyzstan faces a challenge in the form of a decrease in tax revenue, it also presents an opportunity to reevaluate strategies and establish a more sustainable future for cryptocurrency mining.
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