New High Tax Rate On Crypto Miners In Kazakhstan, Here’s Whybit2main
Kazakhstan has imposed new tax rules on crypto miners, this new taxation system shall be differentiating the tax rates on crypto mining. It also includes crypto miners that use renewable energy resources. President of Kazakhstan Kassym-Jomart Tokayev has signed this law which shall be amended into the country’s Tax Code.
The amount of tax levied shall be related to the amount and average price of electricity that miners are consuming during the extraction of cryptocurrencies such as Bitcoin. There has been constant attempts to regulate crypto mining activities including Bitcoin and other cryptos in Kazakhstan.
With the new law, it seeks to amend the current law “On Taxes and Other Mandatory Payments to the Budget” along with the supplementary law which is to improve the establishment of the Tax Code. This new law imposed on crypto miners arrives after the Central Asian country’s clamped down crypto miners.
Crypto mining is a competitive field and it makes use of the proof-of-work (consensus mechanism) method. Through this method it carries out verification and adds a new transaction in the blockchain. Apparently, the electricity usage tax rates in Kazakhstan start from as low as KZT 1 (USD 0.0021) per kilowatt-hour.
Crypto Mining Tax Depends On The Kind Of Energy Source Used
The amount of tax levied as mentioned above will primarily depend on the average price of electricity that has been consumed to mint the digital asset within a particular tax period. The taxes begin from 1 Kazakhstani tenge per kilowatt-hour (kWh).
The tax will also be calculated depending on the source from where the energy is being generated. Miners using renewable sources shall have to pay the lowest tax rate of 1 tenge per kWh, doesn’t matter the cost.
A surcharge was also brought into action on Jan 1 this year, it was done after the country witnessed increased power deficit in the previous year. The deficit in the power was attributed to the increased number of miners in the country after the Chinese crackdown on the industry last year.
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Energy Crisis And The Change In Treatment Towards Crypto Mining
The climate of Kazakhstan along with resources such as coal mines makes it conducive for crypto mining. The country earlier constituted 18.1% of the global hashrate which made it the second country with the highest number of miners. Many businesses decided to start mining operations after China’s ban.
This led to an increased load on the nation’s power grid. This is when the country started to put limitations on mining operations, along with this, it also introduced restrictions on electrical supply during winter months.
Due to this, many mining activities came to a stop across many regions. Some even decided to leave the country and choose other locations for mining coins.
Increased load on the power grid forced the President and other authorities to raise taxes after locating and identifying miners across the nation.
Earlier this year, the state auditors started to take action against mining operations that tried to bypass taxes and tried to benefit from taxes that they were not supposed to benefit from at all.
The hike in tax rates are aimed to bring down the electricity load on the power grid by discouraging the heavy consumption of electricity which was originally meant for domestic purposes.
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Featured image from The Astana Times, chart from TradingView.com