According to the country’s mining association, licensed crypto-mining firms have already removed a third of their coin-minting hardware from Kazakhstan. The news comes amid power shortages and upcoming tax hikes that are turning miners away from the Central Asian nation.
Bitcoin Miners Start Pulling Machines Out of Kazakhstan
Companies, legally operating mining facilities in Kazakhstan, have already relocated around 30% of their mining equipment elsewhere. The President of the National Association of Blockchain and Data Center Industry of Kazakhstan Alan Dorjiyev told Forklog about the migration.
The executive noted that miners have been swayed by ongoing energy supply issues and a planned tax hike. His organization represents large companies involved in the mining of digital currencies representing 70% of the crypto mining sector in Kazakhstan.
The report quotes legislative documents indicating that Kazakhstan’s parliament prepares to impose on miners a tax of 10 tenge (approx. $0.02) per kilowatt-hour (kWh) of electricity generated from domestic energy resources and 5 tenge per kWh for imported electrical energy.
The charge on electricity generated from natural gas and renewable sources, excluding hydroelectricity, will be 3 tenges per kWh, if lawmakers pass the proposed changes. In 2021, Nur-Sultan authorities introduced a surcharge of 1 tenge ($0.0023 at the time) per kWh of electricity used to mint cryptocurrencies.
Kazakhstan became a mining hotspot following China’s decision to launch a nation-wide crackdown on the industry in May, and largely due to its capped electricity rates. The country initially welcomed mining companies but since then, their energy-intensive operations have been blamed for a growing power deficit.
To deal with the shortages, the government increased electricity imports from the Russian Federation and shut down legal mining operations due to winter power outages. Instructed by President Kassym-Jomart Tokayev, the Ministry of Energy, the Financial Monitoring Agency and law enforcement also prosecuted the illegal miners.
Dorjiyev further commented that the country is gradually becoming an “unfavorable jurisdiction for the crypto mining business.” He also warned that Kazakhstan will lose its leading position in terms of the amount of computing power it controls in the bitcoin network. As of August 2021, the country’s share in the global hashrate had reached 18%, second only to that of the United States.
To quell protests against rising fuel prices in early January, Tokayev’s administration temporarily closed banks and restricted internet access. The measures also affected the mining sector. Political unrest and power outages have already forced some mining companies to relocate to other countries such as the United States.
