Kazakhstan government is considering a three-pronged proposal designed to make crypto miners pay much more for operating in the country, which could make the Central Asian country less attractive to the industry. Kazakhstan’s First Vice Minister of Finance, Marat Sultangaziyev, proposed a price increase from $0.0023 per Kwh to $0.01 (around a 335% increase), targetting crypto miners. The vice minister also proposed a tax on each individual graphics card (GPU) and each piece of equipment needed for crypto mining.
The minister proposed to remove mining hardware from an exemption on value-added tax (VAT).
Sultangaziyev likened the tax-per-video card to the way casinos are taxed for each table they run, whether or not the table is active. The third part of his proposal was to remove mining hardware from an exemption on value-added tax (VAT). Mining Bitcoin requires specific hardware to complete the complex mathematical calculations needed to create new blocks on the blockchain. Larger mining operations house upwards of 10,000 mining rigs, including ASICs (application-specific integrated circuits), GPUs, racks, cooling units, and associated facilities.
Political unrest in Kazakhstan could harm bitcoin miners.
Kazakhstan has remained one of the most popular destinations for crypto miners following the China ban on mining last summer. However, the political unrest that caused the government to restrict internet access last month seems to change things for the crypto miners. Around Jan. 5, the Bitcoin network’s hash rate plummeted by 13.4% in a day from about 205 exahashes per second (EH/s) to 177 EH/s due to the brief shutdown in Kazakhstan. BIT Mining, a large Bitcoin mining operation that moved from China to Kazakhstan last July, stated that the political unrest would not force it to move its operations elsewhere. However, that was before the power and tax increases were proposed.