Kazakhstan has collected almost $35 million in tax from companies mining cryptocurrencies in the country in just three years, a high-ranking government representative announced.
By promoting the mining and trading of digital assets, the Central Asian nation will not only increase its budget revenues further, but also become a regional crypto hub, the official is convinced.
Kazakhstan registers growing revenues from crypto mining
The mining of digital currencies has been developing in Kazakhstan, accounting for 17.7 billion tenge (over $34.6 million) of budget receipts over the past three years, according to Kanysh Tuleushin, vice minister of digital development, innovation and aerospace industry.
In an article published by the Kazakhstanskaya Pravda newspaper, Tuleushin revealed that since 2023, the government has issued 84 mining licenses and accredited five mining pools. The authorities have also registered 415,000 units of coin minting equipment.
The official believes this helped bump the trading volume on crypto exchanges operating out of the Astana International Financial Centre (AIFC) from $324.2 million in 2023 to $1.4 billion in 2024.
The turnover is likely to increase in the future as since Jan. 1, 2025, crypto miners are required to sell at least 75% of their digital assets via AIFC-registered trading platforms, the deputy minister noted.
Crypto miners can help develop Kazakhstan’s energy system
Bitcoin mining farms can also contribute to the development of Kazakhstan’s power generation and utilize excess petroleum gas produced during oil extraction, Kanysh Tuleushin suggested in his op-ed piece, elaborating:
“Miners could help us upgrade our energy system. In the U.S., they participate in balancing the power grid, consuming extra energy when demand is low.”
Foreign companies investing in modernizing Kazakhstan’s thermal power plants are currently required to provide 70% of generated electricity to the national power grid and are free to use the remaining 30% to power crypto mining facilities.
Furthermore, data processing centers could be built near oil fields and burn associated petroleum gas (APG) to satisfy their energy needs, Tuleushin added.
As a byproduct of oil drilling, APG can be used for on-site generation of electricity needed by crypto miners. This would also reduce carbon footprint while boosting revenues of oil producers, the government representative explained.
Kazakhstan attracted miners with its relatively low electricity rates amid a crackdown on the industry in China a few years ago. However, the sector has been blamed for the country’s growing energy deficit and frequent power outages.
Despite the shortages, mining farms consumed 901 million kilowatt-hours of electricity last year, costing $25.5 million, according to the Chairman of the Supreme Audit Chamber Alikhan Smailov, quoted by the business news outlet Kursiv.
Miners operating in the former Soviet republic are required to purchase electricity through centralized auctions organized by the Kazakhstan Electricity and Power Market Operator (KOREM) which also sells energy imported from neighboring Russia.
Digital minister calls for flexible crypto rules in Kazakhstan
The government in Astana is taking a cautious approach regarding the crypto market, Kanysh Tuleushin emphasized, noting that it classifies digital assets into two categories – secured, which are backed by other assets, and non-secured such as Bitcoin, Ethereum and the like.
Officially, trading is only allowed within the special legal regime of the AIFC financial hub, but according to some estimates, the bulk of Kazakhstan’s crypto turnover, or over 91% of the $4.1 billion of transactions in 2023, is still outside state oversight. Tuleushin argued:
“However, if all restrictions were lifted and digital asset trading was allowed across Kazakhstan, the impact could be significant. Flexible rules would attract major players, as we saw in the UAE.”
Kazakhstan may become Central Asia’s crypto hub, competing with Uzbekistan and Kyrgyzstan, which have embraced the crypto market, the vice minister believes. He is convinced its legalization would pour billions of tenge into the national budget.
“For example, just a 10% tax could generate more than 190 billion tenge per year (almost $373 million), enough to build dozens of new schools and hospitals,” Tuleushin calculated, urging for the adoption of favorable crypto regulations beyond the jurisdiction of the AIFC.
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