These are challenging times for companies and mining pools that mine cryptocurrencies. In many countries, serious restrictions are imposed on them in the form of tax increases or a complete ban on mining. China is the leader in this area. Apparently, the Republic of Kazakhstan follows a similar course, deciding to introduce a new tax on electricity.
Therefore, miners, especially those operating in the PRC, have to look for new locations for their activities. In particular, it can be Russia, as well as the region of Central Asia.
Over the past few months, the PRC authorities have dramatically increased pressure on cryptocurrency mining companies. A number of provinces have already introduced a complete ban on such activities, miners are subject to administrative fines and sometimes criminal prosecution. Realizing that the central government of the PRC will continue its repressive policy towards miners, they began to look for new jurisdictions to work with.
Thus, one of the largest Chinese manufacturers of mining equipment, Canaan, is moving its operations to Kazakhstan amid tough measures against mining by the Chinese authorities. However, if earlier Kazakhstan was a very attractive country for miners due to the lack of mining licenses and cheap electricity.
Now the country can introduce an electricity tax for miners. With the introduction of the new tax, the country will become less attractive for miners.
Kazakhstan tightens tax burden on mining farms
The country’s authorities don’t have clear statistics regarding the availability of mining farms. According to rough estimates, at least 13 companies operate in Kazakhstan.
As foreign portals point out, more than 6% of machines used for currency mining concentrated in the country. Such a market could not remain outside the attention of the authorities for a long time. It is planned to introduce changes to the Tax Code. If the regulators will adopt the changes, then from January 2022 a tax levy of 1 tenge per kilowatt per hour will come into force.
At the same time, the authorities are not going to punish those miners who do not want to pay a new fee. It is only needed to start the very process of administering and accounting for mining companies. However, such plans of the authorities cause criticism from miners. They believe that if a new tax introduced, then they will have to look for new locations for data centers.
Moreover, there is no guarantee that this fee will not be increased after some time. Then you will have to cut equipment costs or leave the state altogether. It can also alienate investors who are used to cheap electricity in Kazakhstan. They will leave too. In the meantime, the process of approving the new tax collection is going on in ministries and departments. Perhaps the authorities will understand all the risks of such an innovation and refuse to raise the tax.
Thus, it becomes obvious that a difficult period is really coming for mining companies. They will have to look for other locations for themselves, and there are countries where they can deploy. But even there there are certain difficulties with the placement of equipment. Therefore, mining farms will have to adapt to new conditions in order to make a profit.