Kyrgyzstan’s cryptocurrency mining tax increases significantly
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Kyrgyzstan has vast untapped hydropower resources and will see a significant increase in tax revenues from cryptocurrency mining activities in 2023.
According to local media reports on January 1, the Ministry of Finance report stated that, reveal The Kyrgyz government collected 78.6 million soms (approximately $883,000) in taxes from cryptocurrency miners in the first 11 months of 2023.
The latest tax figure is a significant increase compared to the 11.1 million soms ($133,200) collected during the same period last year.
Tax revenue generated from cryptocurrency mining in Kyrgyzstan has fluctuated in 2023.monthly Income varies greatlyIt reached a low of 738,000 som ($8,284) in February, peaked at 11.6 million som ($130,212) in August, and then stabilized at 7.6 million som ($85,767) in November.
Currently, the country only hosts An officially operating cryptocurrency mining companyThis is in sharp contrast to the past, when there were several companies active in this field. The Kyrgyz government imposes a 10% tax on the cost of electricity for mining, including value-added tax and sales tax.
Kyrgyzstan is rich in natural resources, especially water resources More than 35,000 kilometers of glaciers, lakes and rivers play a vital role in supporting the mining industry. Although these resources are largely untapped, they still fuel cryptocurrency mining’s reliance on hydroelectric power.
In July 2023, Kyrgyz President Sadyr Japarov approved the establishment of a cryptocurrency mining facility at the Kambar-Ata-2 hydroelectric power plant. Cryptocurrency miners in Kyrgyzstan charge five times more than the average consumer.
The industry faces challenges in 2023, including low dam levels and power import restrictions resulting from agreements with neighboring countries. Despite these obstacles, the industry managed to consume 17 million kilowatt hours of electricity as of early October.
Kyrgyzstan, along with neighboring Kazakhstan, has become a hub for mining companies after China cracked down on the industry three years ago. However, the surge has led to increased electricity demand in the country, prompting laws to limit miners’ power usage.
Kyrgyzstan has huge energy production potential, with a power generation capacity of 142 billion kilowatt hours. However, only a small portion (approximately 10%) is currently used for mining activities.
The government’s approach to regulating the cryptocurrency industry is also dynamic. It has shut down illegal mining operations, Increase electricity bills Legislation targeting miners will be enacted in late 2021 and enacted in 2022 to provide a legal framework for virtual assets.
The legislation includes a ban on cryptocurrency payments and taxes on investment income and mining gains, while requiring mining companies to register.
