Digital miners of Kazakhstan complained to Tokayev about “exorbitant fees for digital mining”

Date: 29.09.2023

Eight Kazakh companies involved in digital mining signed an open letter to the President of Kazakhstan Kassym-Jomart Tokayev. In it, licensed representatives of the digital mining industry claim that the cost of electricity for mining is too high and ask to review the state's tax policy in this area.

The companies note that the digital mining industry in Kazakhstan “is in extremely dire straits”:
“Today, all the largest representatives of the industry have suspended their activities and plan to completely cease their business in the Republic of Kazakhstan by the end of the year.”

Kazakhstan became the first country in the world that, thanks to the interaction of business and government agencies, was able to set all control points and build the entire mechanism for interaction between elements of the digital ecosystem. The market consciously 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 domestic digital mining industry was supposed to gain a new impetus for development against the backdrop of the adopted regulation. Unfortunately, the signatories of the open letter note, the entire positive effect of regulation is undermined by the tax administration of digital mining. In their opinion, the President’s order, announced in February 2022 regarding a multiple increase in the mining tax, was “taken too literally” by the Ministry of National Economy:

“As a result, our country lost its share of the global volume of digital mining from 14.03% in 2022 to 4% in 2023. Without understanding the specifics and economic issues, as well as the cost of digital mining, a differentiated system was introduced in 2023 a fee rate of up to 26 tenge/kWh, the detrimental effect of which essentially destroys the industry and does not allow digital miners to optimize their activities in order to reduce costs. Up to 80% of the cost of digital assets is the cost of electrical energy.

For what purpose does the Republic of Kazakhstan announce to the whole world its goal of becoming a regional crypto hub and developing data centers for data processing, if the digital mining industry is on the outskirts of the country’s economic agenda and is stagnating due to ineffective and unbalanced tax regulation?”

At the end of the open letter, business representatives ask the president to instruct him to review tax policy regarding the digital mining industry.

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