30% of Mining Equipment Moved out of Kazakhstan
According to the mining association in Kazakhstan, almost one-third of the crypto minting hardware used by authorized crypto mining businesses has already been taken out of the country. This news comes amidst upcoming increases in tax and shortages in electricity that are becoming a turnoff for miners operating in the Central Asian nation. Therefore, even though the companies were operating legally in the mining facilities available, they have already moved out 30% of their hardware. This migration was disclosed by Alan Dorjiyev, who is the President of the National Association of Blockchain and Data Center Industry in the country.
According to the executive, the expected tax increase and the persistent problems with the electricity supply has had an impact on the miners. His organization represents some prominent companies that are engaged in the mining of digital currencies and account for almost 70% of the crypto mining sector in Kazakhstan. Legislative documents were quoted in the report, which indicate that the parliament in Kazakhstan is prepared to impose a tax on miners of about 10 tenge ($0.02) for every kilowatt-hour (kW) of electricity obtained via domestic resources and 5 tenge for every kilowatt-hour of electricity that has been imported.
As far as the electricity produced from renewable resources and natural gas, excluding hydropower, is concerned, the levy for that will be around 3 tenge per kWh, if the proposed changes are adopted by the lawmakers. Authorities in Nur-Sultan had introduced a charge of about 1 tenge ($0.0023 back then) for every kWh of electricity that was used for mining cryptocurrencies in 2021. Kazakhstan had become a hotspot for mining after China made a decision to launch a crackdown on the industry nationwide back in May last year. Moreover, its capped electricity rates had also attracted crypto miners. Initially, the country had welcomed these crypto miners, but the growing power deficit in Kazakhstan has been blamed on the energy-intensive mining operations.
The government had had to increase its electricity imports from Russia to deal with the shortages and during the winter blackouts, they even shut down legal crypto mining operations. Moreover, on the instruction of the country’s President Kassym-Jomart Tokayev, action has also been taken against illegal miners through the combined efforts of law enforcement, the Financial Monitoring Agency and the Ministry of Energy. Dorjiyev went on to say that Kazakhstan was becoming an unfavorable country for crypto mining operations.
He also added that the country would lose its top position in the hashrate it contributes to the bitcoin network. The country’s share has increased to 18% in the global hashrate as of August 2021, which is only second to the United States. In early January, rising fuel prices had resulted in protests in the country, so the president had restricted internet access and shut down banks. These measures had also affected the mining sector. The interruptions in the power supply, along with the political turmoil, has already forced some of the mining companies to shift their operations to other countries, such as the United States.