According to official data, crypto mining allowed the government in the Central Asian country of Kazakhstan to rake in about $1.5 million in the first quarter of the year. The government had introduced a fee on crypto miners for the electricity they use to me digital currencies back in January, which allows them to make money. This week, the government announced that they had managed to accumulate roughly 652 million tengein the first three months of 2022, thanks to the crypto mining industry. All of this was because of the surcharge that they had imposed on the electricity that crypto mining farms consume while legally operating in the country.
The implementation began on January 1st, 2022 and the rate that applies is about 1 tengefor every kilowatt of electricity that is used per hour for minting digital currencies. The crypto mining companies running these operations have to pay this surcharge on the 20th of the month after the quarter ends. It should be noted that the tax code of Kazakhstan does not include the surcharge for now. Now, the authorities are planning on introducing differentiated rates that would vary according to the power consumed.
The amendments that are required for this purpose recently received approval on the first reading in the lower house of the parliament in Kazakhstan called Mazhilis. While this amendment would definitely help in increasing receipts for the budget, it would also mean that the energy-intensive process of mining digital currencies would be able to consume a limited amount of electricity. Last year, China had launched a crackdown against the crypto mining industry in May, which had driven crypto miners out towards other regions offering cheap electricity. The Central Asian country became one of the hotspots because of its low rates, but the influx of miners resulted in a power deficit that invited a lot of criticism.
Therefore, the government of Kazakhstan had shut down numerous mining companies. Some companies have already decided to leave the country because of the electricity shortages. In February, the government held a meeting in which Kassym-JomartTokayev, the President of Kazakhstan, had tasked the officials with multiplying the tax applicable to crypto mining. In another order, the President told the financial authority of Kazakhstan to make a record of all crypto-mining farms and to go over their custom and tax documents.
Miners have some rules and requirements to meet when it comes to regulation and registration in Kazakhstan and these were expanded back in May. In accordance with the new rules and requirements, now businesses have to provide a great deal of information, which include the investments they plan, the energy required by their mining equipment, along with the number of workers. In the meantime, government officials and auditors are working to close the loopholes in taxation rules that could beand are being exploited by mining companies in the country. This would help in providing the government more revenue that could come in handy.