Kyrgyzstan Government Wins 78.6 Million Soms From Crypto Mining Tax

JAKARTA - The Kyrgyzstan government managed to collect 78.6 million soms (around Rp13.6 billion) from a cryptocurrency mining tax during the first 11 months of 2023. This was revealed according to local media reports citing the Ministry of Finance.

Tax revenues from crypto mining varied in Kyrgyzstan in 2023, ranging from 738,000 soms (Rp128.1 million) in February to 11.6 million soms (Rp2 billion) in August. In November, the last reported month, receipts remained at 7.6 million soms (Rp1.3 billion) after dropping from the peak of August.

Currently, there is only one cryptocurrency mining company officially operating in Kyrgyzstan, although previously there were many companies.

Tax revenue from crypto mining for the first 11 months of 2022 reached 11.1 million soms (Rp2 billion). The tax rate is 10% of electricity costs, including added value tax and sales.

Kyrgyzstan has enormous water resources in the form of glaciers, high-level lakes, and rivers, which have a total length of more than 35,000 km. However, most of these resources are still not developed. Crypto miners in the country rely on hydropower.

The President of Kyrgyzstan, Sadyr Japarov, approved the construction of a crypto mining facility at the Kambar-Ata-2 Hydroelectric Power Plant in July 2023. Crypto miners are charged a rate five times higher than the general tariff in Kyrgyzstan.

Cryptocurrency production was hampered in 2023 by low content levels on dams and shipping restrictions due to contracts with neighboring countries. Miners are forced to import electricity, and sometimes governments are doing so too. In early October 2023, the industry had consumed 17 million KWh of electricity.

Energy use by crypto miners has been controversial for years. Cryptocurrency exchanges are legal in the country, but crypto trafficking is not regulated.