When the price of Bitcoin rises, it is a welcome development. However, this is terrible news for BTC miners operating in Kazakhstan, as it increases taxation.
Kazakhstan was formerly considered a desirable destination for crypto miners when the Chinese government banned all Bitcoin mining activities. However, the country appears to be planning new tariffs that will negatively influence the business. On the 14th of April, Alibek Kuantyrov, the Minister of National Economy, stated in a briefing that the commission is developing a tax scheme that would tie income taxes to the value of the coins that have been mined.
As per Kuantyrov’s comments, which were published initially by ForkLog, the nation would benefit financially due to the increase in taxation, which will result in an increase in revenue for the national budget. On the other hand, this move may prompt several miners to look into other nations, such as El Salvador, where taxation is just 10%, to help fund the building of Bitcoin City in the state.
“The taxation on miners is being reviewed for possible increment, and we are working on connecting the tax rate for crypto miners to the worth of cryptocurrencies. If the crypto market continues to develop, it will be beneficial to the government’s budget,” the minister added.
Kazakhstan Is Becoming Less Appealing To Cryptocurrency Miners
When miners arrived in Kazakhstan, the Kazakh government greeted them with great enthusiasm; unfortunately, this position was reversed some months later due to the issue of power consumption by miners. The government moved from providing one of the least expensive energy sources globally for mining to imposing taxation of 20 cents for every kWh.
In addition to the levy, the government has begun closing down several mining facilities, converting the so-called utopia into a source of contention for the BTC in the mining community. Kazakhstan has “gone from superheroes to nothing,” according to Denis Russinovich, co-founder of CMG (Cryptocurrency Mining Group), a firm that has been in operation in the nation since 2017. Russinovich also condemned the regulatory changes adopted that have been adopted by the state recently, noting that it is too much for them.
More Taxes For Miners If BTC Rises
According to Alan Dorjiyev, Kazakhstan’s Director for NABDCI (National Association of Blockchain and Data Center Industry), the state is considering a power tax charge tied to Bitcoin’s price. He noted that:
“For example, one tax for BTC prices prices up to $40k, another tax for BTC prices exceeding $40k and so on. However, this is still in the early stages of debate.”
Mining operations in the region may become useless shortly, given the possibility of another increment in the power charges at any time and the constant power cuts experienced by miners since January. Dorjiyev claims that power is yet to be fully restored in several areas.