Cryptocurrency miners in Kazakhstan are paying more for their energy this year, as the government encourages the use of renewable energy and limits excessive electricity consumption that contributes to shortages. Under a new tax code that took effect on Jan. 1, Astana introduced a sliding scale for a previously flat-rate energy consumption surcharge for cryptocurrency miners that came into effect last year.
The surcharge depends on the average price they pay to produce the coins over a given tax reporting period. The cheaper the electricity, the higher the surcharge.
For example, if the producer pays 24 tenge, worth about $0.05, or more per kilowatt-hour, the surcharge remains at 1 tenge. If they pay 5-10 tenge, the surcharge will reach 10 tenge.
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Cryptocurrency miners pay variable rates because they purchase unused capacity of power plants through auctions. Those using renewable energy will continue to pay a flat rate of 1 tenge.
President Kassym-Jomart Tokayev ordered the government to review the surcharge in February 2022, when he said 1 tenge was a “pitifully small” amount for miners making big profits.
Crypto miners flocked to Kazakhstan from China in 2021 after Beijing banned operations there. Their energy-intensive operations have caused demand for electricity to skyrocket, resulting in widespread power outages.
The government then began cracking down on illegal mining and increasing regulation on legal cryptocurrency operations.
At that time, the sector was dominated by well-connected tycoons such as Bolat Nazarbayev, the brother of former President Nursultan Nazarbayev.
After the latter fell out of favor following the violent unrest in Kazakhstan last January, the government moved against Bolat Nazarbayev’s crypto-farms, which implied that they were illegally mining coins. He “voluntarily” closed them.
Several other businessmen with ties to the Nazarbayev family have also “voluntarily” closed their operations. Among them, Kayrat Sharipbayev, who would be the partner of Dariga Nazarbayeva, the eldest daughter of the ex-president.
Investigators said while crypto mining presented a “threat to the country’s economic security”.
Changes to electricity payments for crypto miners are Astana’s latest step in tackling this issue through tougher regulation.
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