Kazakhstan Government Sets Stricter Rules For Crypto Mining

The government of Kazakhstan has set new reporting requirements for cryptocurrency mining operators. (photo: doc. pixabay)

JAKARTA - The government of Kazakhstan has set new reporting requirements for cryptocurrency mining operators with keen attention to how industrial energy use affects local power grids.

The order issued by the country's Minister of Digital Development earlier this week compels digital mining businesses to provide comprehensive information 30 days before starting operations.

Electricity consumption and "technical specifications" for connection to the power grid must be provided before starting operation. The quantity and type of mining equipment used, the customs declaration of cargo for the equipment and any investments planned for the next 12 months should also be included.

Kazakhstan was flooded with an influx of crypto miners after the Chinese government cracked down on the practice in mid-2021. The increasing use of mining rigs in the country is depressing energy supplies and forcing the Kazakh government to take action. Sometimes it even cuts off electricity to the miners.

The new reporting requirements also state that miners must submit information about the legal entity conducting the operation, which must be a resident of the Republic of Kazakhstan, along with contact information, as well as physical and IP addresses used in their activities.

The same information needs to be updated and submitted in mandatory quarterly reports, companies terminating mining operations need to report when they have done so.

This latest order is an update of an existing order by the Minister in October 2020 which regulates the rules for providing information on digital mining activities.

Proposals to raise electricity prices and increase taxes on crypto miners were put forward in February, suggesting a 335% electricity price increase along with removing the value added tax (VAT) exemption on mining equipment and instead imposing a tax on each individual share.

The Kazakh authorities have been trying to stamp out illegal crypto mining operations in the country because of the burden they place on the energy grid. In March, 106 illegal crypto mining operations were shut down following raids by the Financial Monitoring Agency which seized more than 67,000 pieces of equipment at the time.

The latest update to the Cambridge Bitcoin Electricity Consumption Index (CBECI) in August 2021 shows Kazakhstan hosts more than 18% of the world's BTC hash rate, the second country behind the United States.