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- Kazakhstan plans to form amends in the Tax Code of the country
- Tax-free regime shall come to an end, disrupting local miners
- Kazakhstan competes with mining giants
After the Chinese crackdown on cryptocurrency mining intensified in the past few months, the miners are looking to set up their machines elsewhere. Kazakhstan is becoming the new hub for miners and because of increased energy consumption in the country, the Government is planning to resort to tax regulations for miners to control the excessive use of electricity. Although the Chinese ban on cryptocurrency opens new opportunities, it may also open more problems like more electricity usage.
Kazakhstan becomes the next hub for mining after China crackdown
The lawmakers in Kazakhstan are preparing for new tax regulations to curb the uncontrolled energy used by the cryptocurrency miners. After China imposed a heavy crackdown, Kazakhstan has emerged as the next hub for miners who want to establish new machines and plants. Presently, the country has a tax-free regime and due to future concerns that may arise, it is looking forward to eradicating the tax-free policy. Lawmakers are suggesting an amendment to the current Tax Code of Kazakhstan. This amendment means that now the miners shall have to pay 1% tax on every kilowatt per hour of energy used, with effect from january 2021, only if the law is passed.
Tax regulations could be implemented by the Government
A tax fee that is so small can only mean one thing, that the Government wants to set a precedent. It wants to symbolize that the authorities will not tolerate unregulated mining of digital currency. Miners that are associated with blockchain mining constitute about 3.3% of the country-wide consumption annually, according to the Blockchain Association and Data Center Industry. The country is responsible for 6.17% of the total Bitcoin mining and around 13 crypto farms are currently in operation. Almost close to the top mining producers like Russia and the United States, it is competing to grow even more.
The Tax regulation might not be taken positively by the local bodies. Miners nationally spread across the country are not happy with the tax imposements. Even if the percentage of the fee is very low, it involves Government manipulation of the decentralized system. Acting directly against the core concept of Bitcoin and other currencies as well- Decentralized Finance (DeFi). This could also prevent new miners to indulge in the sector and fear out the existing small and local miners as well.
However, Albert Rau, a Deputy of the Tax department in Kazakhstan, initiated the amendments to also generate an added revenue for the Government. Hence, concluding the fact that cryptocurrency is not just benefiting the investors and miners but the Government to a certain extent as well.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
