The Kazakhstani government received over $7 million in tax payments from cryptocurrency mining entities in 2022, thanks to an amended law that regulates the fiscal burden of mining cryptocurrencies. However, the fees collected in 2023 by April 27th were significantly lower than the previous year, totalling only $541,000.
Kazakhstan is one of the world’s top Bitcoin mining hubs, with the country contributing 13.22% of the total Bitcoin hash rate as of January 2022. The introduction of taxes on digital mining based on electricity consumption by mining entities on January 1, 2022, was a response to growing frustration with crypto miners’ undertaxed usage of the national power grid.
The move was also seen as a legal path for further adoption amid tightening regulations worldwide. However, it impacted the already tricky relations between the country and miners, as a wave of foreign mining operators relocated to Kazakhstan during the 2021 bull market.
The new tax regulations were necessary for Kazakhstan to establish its position in the global crypto industry, and the revenue earned from mining fees has allowed the government to invest in various initiatives, including renewable energy projects.
Kazakhstan’s approach towards crypto has been cautious yet optimistic. While the country has welcomed crypto miners, it has also announced plans to introduce new crypto regulations to curb tax fraud and unlawful business operations. One proposal is for government approval for secured digital assets issuers, while another would require miners to sell at least 75% of crypto earned via registered exchanges.
These new regulations are expected to reduce tax evasion and promote transparency in the crypto industry. The government is also exploring the possibility of creating a national digital currency, which could bring in additional revenue and stimulate economic growth.
The Kazakhstani government’s proactive approach towards crypto is a positive sign for the industry’s future in the country. As more countries around the world begin to regulate crypto, Kazakhstan’s actions demonstrate a willingness to embrace the technology while also ensuring it is being used responsibly and contributing to the country’s economy.