Kyrgyzstan Raises IDR 13 Billion From Crypto Mining Tax

Bitcoin mining machine. (Photo; Doc. Chinadialogue)

JAKARTA - Kyrgyzstan, one of the countries in the Central Asian region, has turned out to be one of the crypto mining centers in the world. By utilizing abundant water resources, crypto miners in this country are able to generate large revenues, as well as pay taxes to the government.

According to local media 24KG reports, the ministry of finance Kyrgyzstan reported that it had raised US$900,000 (Rp13.9 billion) in tax revenue from crypto miners in the first 11 months of 2023. This includes a very profitable August, in which miners pay taxes of around US$132,000 (Rp2 billion) to the state.

Data from the ministry appears to show growth in crypto mining activity in Kyrgyzstan. The report also notes that crypto mining-related tax payments "started to grow actively in the second quarter of this year." Tax payments in February were around $8,300, with revenue soaring rapidly in April.

Miners Use Hydroelectric Power

Minister of Energy Kyrgyzstan, Taalaibek Ibraev, stated that most of the crypto mining "farms" in Kyrgyzstan are "an affiliate with small hydroelectric power plants." He previously said that "the electricity generated" by most power plants "is used for the needs of the country itself." However, he acknowledged that many power generation owners work with crypto mining companies "contractually."

Apart from that, crypto miners have seen very enthusiastic locations in Kyrgyzstan in recent years. Like Costa Rica and Paraguay, Kyrgyzstan generates most of its electricity from its river network. The combination of power like this is ideal for their environmentally friendly crypto mining operations.

The International Trade Administration, a US government agency tasked with promoting international trade, said that Kyrgyzstan "has tremendous hydropower potential." The agency said about 142 billion kWh of energy could be produced in the country, "with only 10% being utilized."

The International Trade Administration added: "Waterbags account for most of the electricity generated in the Republic of Kyrgyzstan (nearly 90 percent)." Kyrgyzstan not only attracts the attention of crypto miners, but also other digital financial industry players.