After China banned Bitcoin mining activities, Kazakhstan became the ideal location for migrating miners. However, the regulatory environment in the country is changing, and it could discourage more miners from setting base in Kazakhstan.
Kazakh miners to pay more taxes
On April 14, the Minister of National Economy in Kazakhstan, Alibek Kuantyrov, issued a statement on a tax plan that will link tax payments to the value of mined cryptocurrencies.
A report from ForkLog said that the move would allow the country to support itself financially because it would increase the state budget. Raising the taxes will make some miners leave Kazakhstan and move to other countries where Bitcoin mining taxes are considerably low.
Kuantyrov’s statement read, “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 the cryptocurrency grows, it will be good for the budget.”
Before this tax plan, Kazakhstan was a favourable location for miners because of providing cheap energy. However, the government increased the cost of energy used for mining activities. The government is also shutting down mining firms operating illegally.
Bitcoin miners in Kazakhstan are already complaining about the shifting regulatory framework. The co-founder of Cryptocurrency Mining Group (CMG), Denis Rusinovich, said that Kazakhstan “went from being heroes to nothing.” He also condemned the regulatory changes being made by the government.
Bitcoin gains lead to more taxes
The Director of the National Association of Blockchain and Data Center Industry in Kazakhstan, Alan Dorjiyev, said that the Kazakh government was considering imposing an energy tax levy determined by the price of Bitcoin.
“A gradation is being considered: for example, up to $40,000 [Bitcoin price] one tax, over $40,000 another tax, etc. But this is still at the level of discussions,” Dorjiyev said.
Currently, miners are anxiously waiting for the cost of mining Bitcoin in Kazakhstan to increase. A rise in the mining tariff could soon be announced, and miners have to deal with regular power interruptions. Some areas have been facing a power outage since January.
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