Once seen as an attractive country for Chinese Bitcoin miners after the country cracked down on all BTC mining activity, Kazakhstan now looks set to create new taxes that will negatively impact the industry.
On April 14, National Economy Minister Alibek Kuantyrov told a government briefing that his team was working on a tax plan that would link the payment of taxes to the valuation of mined tokens.
According to Kuantyrov’s statement, first reported by ForkLog, this will help the country financially in tax collection, as it will result in an improvement in the state budget. However, this decision could lead many miners to explore other countries like El Salvador, where the mining tax will be a flat 10% to finance the construction and services of Bitcoin City.
“We are considering increasing the tax burden for miners, at the moment we are also considering linking the tax rate for miners to the value of the cryptocurrency. If cryptocurrency grows, it will be good for the budget.
Kazakhstan is less attractive for crypto miners
Initially, the Kazakstan government welcomed miners with open arms; however, this position changed a few months later.
The country went from offering one of the cheapest energy in the world for mining to introducing a mining tax of 20 cents per kWh – in one month the cost of energy multiplied by 10- arguing that the energy demand of miners had increased exponentially.
But in addition to the tax, the government has also started shutting down many mining farms, turning the so-called paradise into a headache for the Bitcoin mining industry.
Denis Rusinovich, the co-founder of Cryptocurrency Mining Group (CMG), a company operating since 2017 in Kazakhstan, said that at any moment the country “turned from hero to nothing”, thus condemning the measures regulations put in place by the government.
1|6 Kazakhstan #bitcoinminer trying to fight back by going from “hero to zero”. Over the past 4 years, the community has taken an important step in establishing a new industry in the country and building a strong global position as a hub for bitcoin mining. >>
—Denis Rusinovich (@DenisRusinovich) October 22, 2021
Bullish Bitcoin? More taxes!
Alan Dorjiyev, director of the National Association of Blockchain and Data Center Industry of Kazakhstan, told local media that the government is considering an energy tax correlated to the price of bitcoin.
“A gradation is envisaged: for example, up to $40,000 [bitcoin price] one tax, over $40,000 another tax and so on. But it is still at the level of discussions.
At the moment, carrying out mining activities in the country could be somewhat counterproductive, given that at any moment another increase in the electricity tariff could be announced, not to mention the repeated power cuts that miners suffered since January in many places and which Dorjiyev claims have not yet been fully restored.
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Bitcoin Miners In Kazakhstan Will Pay Taxes Correlated To The Price Of BTC
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