The government of Kyrgyzstan reportedly collected 78.6 million soms (approximately $883,000) in taxes from cryptocurrency miners during the first 11 months of 2023, marking a significant increase compared to the previous year’s revenue.
The tax revenue from crypto mining in Kyrgyzstan exhibited volatility throughout 2023, ranging from 738,000 soms ($8,284) in February to a peak of 11.6 million soms ($130,212) in August. In November, the last reported month, receipts remained steady at 7.6 million soms ($85,767), experiencing a decline from the August high. Currently, only one cryptocurrency mining company operates officially in Kyrgyzstan, down from the multiple companies that were once active.
For the first 11 months of 2022, the tax revenue from crypto mining amounted to 11.1 million soms ($133,200). The taxation rate is set at 10% of the cost of electricity, inclusive of value-added and sales taxes. Kyrgyzstan, with abundant water resources in the form of glaciers, high-altitude lakes, and rivers, largely underdeveloped, relies on hydropower for cryptocurrency mining operations.
In July 2023, Kyrgyz President Sadyr Japarov approved the construction of a crypto mining facility at the Kambar-Ata-2 Hydro Power Plant, where crypto miners are charged a rate five times higher than the general public. Challenges faced by the cryptocurrency production industry in 2023 included low dam fill levels, delivery limitations due to contracts with neighboring countries, and the need to import power. Despite these challenges, Kyrgyzstan’s crypto miners consumed 17 million KWh of electricity by the beginning of October 2023.
The energy consumption by crypto miners has been a subject of controversy globally, and while cryptocurrency exchanges are legal in Kyrgyzstan, the circulation of cryptocurrency itself is not regulated in the country.
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