by On Tuesday, the Kazakhstani government announced that 13 illegal cryptocurrency mining farms had been identified and shut down immediately. The discovery resulted from the five days inspection carried out by the Kazakhstan mobile group formed by the Energy Ministry.
The clampdown of these mining farms is in line with the government’s effort to regulate crypto activities. Kazakhstan is the world’s 2nd bitcoin mining epicenter with a global hash rate share of 18.1%, while the The US occupies the first spot with a worldwide hash rate of 35.4%; the Russian Federation takes the third position by 11.2%.
Discovering the Illegal Farms
In conjunction with the Committee on Atomic and Energy Supervision, the Ministry of Energy, and the representatives of other interested government agencies formed a mobile group with the mandate to inspect mining farms spread across the country. As a result of the inspection, 13 mining farms consuming 202 MW of energy were discovered and shut down.
Regarding the discovery, the government introduced restrictions on energy consumption in some regions. In the West Kazakhstan region, 91 MW was allotted, while 44 MW total digital mining capacity was allowed for the Karaganda region.
However, the Ministry of Energy expresses fears that more illegal mining farms may be scattered in the country. To that effect, the ministry stated that the mobile group would continue to identify and disconnect electric networks of illegal mining farms.
Kazakhstan to Introduce a Tax for Crypto Miners
In June 2021, Kazakhstan’s President, Kassym-Jomart Tokayev legalized bitcoin mining. Since the legalization and China’s crackdown on crypto miners, Kazakhstan has witnessed the growth of crypto miners within its territory. Before the crackdown on crypto miners in China, Kazakhstan’s global hash rate share was about 8%, which increased sporadically to 18.1% following China’s crackdown on miners.
However, on 8th Feb, the President requested an audit of the cryptocurrency mining industry. This is not to say that the President does not support or is against crypto mining. He believes that miners should be licensed and taxed since the mining industry has been legalized.
Supporting the opinion of the President, the First Vice Minister of Finance, Marat Sultangaziev, proposed that crypto miners pay taxes for their equipment every month. He added that the tax would be paid for all mining equipment, whether they are in use or not. He said this tax method could be compared to the casino operators’ tax on their machines.
That notwithstanding, the government of Kazakhstan will by 1st April institute a comprehensive framework to regulate crypto mining in the country. The proposed regulation will enable the country to determine the extent of usage of electric tariffs by crypto miners. It will also help avoid the widespread energy shortages and hike in fuel prices last year; it led the government to cut off electricity throughout the country.
