Crypto Mining Operators In Kazakhstan Complain About High Energy Prices

The main crypto mining operator signed an open letter to President Kassym-Jomart Tokayev. (photo: twitter @aqorda_press)

JAKARTA - Local crypto mining operators in Kazakhstan, the world's third-largest market in terms of Bitcoin mining hash rates, have complained of high energy prices to the country's president.

According to local media, eight major crypto mining operators signed an open letter to President Kassym-Jomart Tokayev. The list includes BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom, and Kinur Investment.

The letter stated that the Kazakh crypto mining industry is in a "very worrying situation" due to high energy prices for miners.

"At this time, all major industry players have stopped their activities and plan to completely stop their business in the Republic of Kazakhstan by the end of this year," their letter read.

The executives who signed the letter believe that this price situation thwarted the government's efforts to regulate the crypto industry in general and mining in particular.

According to the letter, this issue is the result of a decision to raise energy taxes on crypto miners. Due to the tax, the country has lost its position among crypto mining leaders such as the United States, Russia, and China, and the industry is on the verge of extinction.

"If the government does not immediately take urgent steps, the digital mining industry in the Republic of Kazakhstan will stop," they said.

The country began taxing digital mining on January 1, 2022, based on electricity consumption by mining entities. The law emerged due to growing national frustration against the use of the national power grid by crypto miners who were not subject to excise duty.

Even at the highest level, 1 kilowatt hour (kWh) of electricity taxed in Kazakhstan cost miners about US$0.067, much lower than the average of US$0.12 per kWh before tax in the United States. According to data from the Kazakh government, they received around 3.07 billion tenge (Rp109.2 billion) in tax payments from crypto mining entities in 2022.