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Kazakhstan Crypto Miners Raise Alarm Over Rising Energy Prices
Kazakhstan, occupying the third spot globally for Bitcoin mining hash rate, is seeing its local digital currency mining firms protesting against increasing power costs, directing their disapproval at the nation’s president.
Newswire from the country reveals that an open letter to President Kassym-Jomart Tokayev was jointly penned by eight notable crypto mining firms. Among those were big names like BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom and Kinur Invest.
Bitcoin Mining Sector Grapples with Increased Power Rates
The public letter illustrates a “distressful situation” in the crypto mining sector of Kazakhstan due to sky-high energy costs experienced by miners. The message reads:
Signatories of the letter have expressed worry that rising prices could cripple government-led attempts to govern the overall crypto sector, specifically the field of mining. The letter implies that the present predicament stems from a ruling increasing energy taxes for cryptocurrency miners. Such tax hikes have resulted in the nation's fall from leadership in the crypto mining space, a tier still occupied by the likes of the United States, Russia, and China. It warns that the industry sits on the verge of collapse.
Kazakhstan's Digital Mining Tax
On January 1, 2022, Kazakhstan enforced a tax on digital currency mining, the measure was based on the power consumption of mining operations. Heightening dissatisfaction over under taxation of crypto miners exploiting the national power grid prompted the imposition of this rule.
Even with maximum rates applied, crypto miners in Kazakhstan are charged approximately $0.067 per kilowatt hour (kWh), a figure considerably lower than the average pre-tax rate of $0.12 per kWh in the United States. Data divulged by Kazakhstan's government shows its treasury received nearly 3.07 billion tenges (equivalent to $7 million) in tax revenues from crypto miners this year.
