Eight cryptocurrency mining companies from Kazakhstan have sent an open letter to President Kassym-Jomart Tokayev about the “plight” of the industry in the country. Digital Business reports.
Miners were concerned about high electricity tariffs and asked the head of state to reconsider tax policy.
“Today, all the largest representatives of the industry have suspended their activities and plan to completely stop their business in the Republic of Kazakhstan by the end of the year,” the document says.
Among the signatories of the letter: BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Kinur LLC, Green Power Solution Ltd., VerCom and KINUR INVEST.
The authors noted that Kazakhstan adopted “the most advanced legislation in the world” regulating the digital asset market, including the mining industry.
On February 6, Tokayev signed a document obliging miners to license their activities and related regulations. The regulations came into force on April 1.
“The market deliberately took these steps to protect the energy system from unscrupulous participants, as well as to ensure the sustainable development of the digital mining industry based on the principles of transparency and openness,” the Kazakh companies emphasized.
However, in their opinion, all the positive momentum from regulation is undermined by the “exorbitant” taxation of the sector. The authors of the letter noted that the Ministry of National Economy of Kazakhstan was unable to understand the specifics, as well as the cost of mining.
“In 2023, a differentiated fee rate of up to 26 tenge per kWh was introduced, the detrimental effect of which essentially destroys the industry and does not allow miners to optimize their activities in order to reduce costs. Up to 80% of the cost of digital assets is electricity,” they explained.
As a result of this policy, Kazakhstan’s share in global cryptocurrency production decreased from 14% in 2022 to 4% in 2023.
Let us recall that in August the Canaan company temporarily stopped its Bitcoin mining capacity in the republic after compulsory licensing requirements came into force.
ForkLog previously reported that Kazakh miners paid $6.7 million in taxes for 2022.
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