After cryptocurrency clampdown in China, Kazakhstan and Texas became the new bitcoin mining hotspot. Chinese miners were forced to shift to another country to continue mining operations. China attracted a massive number of foreign investors to set up their mining plants in china because china has much cheaper electricity.
After considering the heavy electricity usage in Kazakhstan due to Chinese miners, the government authorities have decided to increase the taxation on cryptocurrency mining operations. Visit the official website of Bitcoin billionaire to attain a detailed guide to bitcoin trading. Let’s have a detailed dive into this topic and see how is government authorities of Kazakhstan will impose taxes on cryptocurrency mining operations.
Why Kazakhstan is an appropriate place for cryptocurrency mining?
Kazakhstan is the neighboring country of China, and the electricity is much cheaper in Kazakhstan than in other countries. When government authorities halted cryptocurrency operations in china, the miners started to explore different suitable options for setting up a mining plant. The majority of the miners have had confusion between Kazakhstan and Texas, so miners started to shift to Texas and Kazakhstan.
Kazakhstan is also a bitcoin mining spot, and many mining plants are being installed in this country. In addition, the country is also exploring the utility of nuclear power for cryptocurrency mining operations. In short, Chinese miners decided to move to this country because of cheaper electricity, the use of nuclear power in the future, and the neighboring country of China.
New taxation structure on cryptocurrency mining operations by the government authorities!
Currently, the cost of one kilowatt in Kazakhstan is merely one Tenge. The spot price of one Tenge in the international marketplace is nearly $0.0023. In short, currently, the rate of electricity in this country is ultimately cheaper than in many countries except Venezuela and Kuwait.
The government authorities will skyrocket taxation on each kilowatt by almost five folds. The new regulatory framework and taxation structure will implicate in April 2022. As per reports, the cost of one kilowatt per hour for mining operations could be even 5 Tenge.
As per sources, the cryptocurrency miners will be subjected to hefty taxes when importing any dedicated mining hardware to Kazakhstan. Kazakhstan at first allowed miners to set up their mining plants and import hardware without any significant custom duty.
However, since miners have established their mining plants in the country, the government is familiar they cannot shift their entire infrastructure to another country. Therefore, one of the cases by the government is increasing taxation on each cryptocurrency operation.
Unquestionably digital currency mining seems like an enterprise business, but this business does not offer gigantic employment to the citizens of Kazakhstan. Besides not offering a considerable employment rate, bitcoin mining correspondingly guzzles heavy power.
Earlier digital currency miners were paying even more money for electricity than the citizens of this country. The President of this country also clarified that Chinese miners were not charged with any tax on importing any equipment related to mining.
Digital currency miners shifted to this country after a clampdown of cryptocurrencies in China. Undoubtedly, central Asian countries charge less for electricity, but there are not sufficient domestic grids that can supply electricity based on miners’ demands.
Besides implicating a proper cryptocurrency taxation structure, the government authorities are also putting efforts to weed out the grey mining concept from the country. Grey mining refers to illegal or unlicensed mining operations.
Recently Kazakhstan’s President ordered the FMA to check the authenticity of each mining plant and check whether they are paying taxes imposed by the government or not. FMA is ordered to report the entire database by the end of March 2022.
Will Texas also increase taxes on electricity?
As mentioned earlier, Kazakhstan is not the only new bitcoin mining hotspot, as Texas was also one of the significant choices of Chinese miners. Kazakhstan might host mining operations larger than Texas, but the state hosts two of the largest bitcoin mining plants. Moreover, electricity is a bit more expensive in Texas than in Kazakhstan, and Texas has no such plans to increase electricity taxation.
The portion mentioned above describes everything about cryptocurrency mining taxation in Kazakhstan.