Crypto mining is proving to be one of Kazakhstan’s important lifelines.
According to a document released by the State Revenue Committee of Kazakhstan’s Ministry of Finance on Tuesday, Bitcoin mining revenues flowed in from 12 different regions of the country.
This has generated a substantial amount of revenue for the government during the first quarter of the current year alone.
In a government report, the Kazakhstani government collected approximately $1.5 million in fees from crypto mining companies.
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Money From Bitcoin Mining
Despite fierce objection to a new crypto mining tax policy implemented in April, an internet outage, and a carbon-intensive energy infrastructure, the Kazakhstani government continued to profit from the crypto mining business.
Kazakhstan accounts for 13.3% of the global hash rate (The Council of Europe).
As a result of the closure of various mining enterprises around the nation, the government’s revenue fell far below earlier projections.
Aset Nauryzbayev, an economist and former chairman of KEGOC’s board, told Rest of World in March 2017:
“It is a lapse on the part of the Energy Ministry, which failed to anticipate problems in the power engineering sector and establish new capacities.”
Kazakhstan Welcomes Crypto
Late in 2019, as the value of Bitcoin plummeted, the Kazakh crypto market became open. Miners’ businesses were promoted, despite the fact that cryptocurrency is not recognized as legal tender.
In his 2020 state-of-the-nation address, Kazakhstan’s President Kassym-Jomart Tokayev challenged the country to produce $1.2 billion in crypto investment over the next five years.
Attracted by cheap electricity and a lack of regulation, the crypto business began to develop in Kazakhstan.
In a report by the state revenue panel, which breaks down the rates by location, the fee collected in the first three months of this year is based on the actual quantity of electrical energy used to carry out mining activities.
Crypto total market cap at $1.26 trillion on the daily chart | Source: TradingView.com
Crypto Miners Required To Pay Fees
For assisting with the network’s security, which is a computationally complicated and energy-intensive procedure, miners are compensated with new coins.
In compliance with the country’s adopted law, miners are compelled to pay a portion of their energy costs to the government. On the 20th day of each quarter’s final month, miners must pay $0.0024 per kilowatt. Parliament is currently discussing this fee, as the SRC pointed out.
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Kazakhstan is home to a disproportionately large share of the mining industry, despite the fact that mining still consumes a negligible amount of the world’s total energy.
The country is home to only 19 million people, yet it accounts for 13.3% of the global hash rate, according to latest data, making it the third-largest Bitcoin mining hotspot in the world.
Featured image from Yahoo News Singapore, chart from TradingView.com