Kyrgyzstan Sees an Increase in Taxes Generated from Crypto Mining
In a recent update, the government of Kyrgyzstan saw an impressive increase in crypto activities. A report featured on Kyrgyzstan’s local news outlets demonstrated that the Finance Ministry received an increase in revenue generated from crypto projects.
In the report, the government official stated that from January last year, they received approximately 78.6 million soms, equating to $883,000 in taxes generated from crypto mining activities.
Crypto Mining Activities in Kyrgyzstan Increases
A review of the tax report demonstrated that the profits from mining activities increased steadily despite the volatile nature of crypto assets. This implies that the taxes paid to the local government increased steadily.
As per the report, the government collected 738,000 soms, which translates to $8284 in February. After six months, taxes from crypto mining activities reached 11.6 million soms, totalling around $130,212 in late August.
Interestingly, the Kyrgyzstan crypto mining activities continued to spur over time due to demand for digital assets in the region. The attempt to meet the growing demand for crypto forced the miners to optimize their mining activities and increase production.
A review of the tax report demonstrated that the total revenue generated from crypto mining activities amounted to 11.1 million soms, equating to $133,200. The increase in crypto mining activities in Kyrgyzstan illustrates that the Central Asian country seeks to become a go-to destination for Bitcoin miners.
Factors Contributing to Increase Crypto Mining Activities in Kyrgyzstan
Kyrgyzstan boasts of multiple hydroelectric power sources connected to the mining sites. However, the power generated from the lakes, rivers and other hydropower plants fails to meet the energy required to mine substantial crypto assets.
This has forced the Kyrgyzstan crypto miners to combine renewable sources with electricity in mining. Citing the Kyrgyzstan law, the crypto miners are legally allowed to engage in responsible mining activities.
However, due to the growing demand for electricity in various industries, Kyrgyzstan allows crypto miners to import electricity and regularly pay taxes for importing power.
For years, the importation of electricity to Kyrgyzstan has met several legal and regulatory hurdles. In a previous interview, crypto miners lamented that occasionally, it’s challenging to import power due to restrictive measures imposed in Asia.
Kyrgyzstan Seek to Introduce Tax Reforms
The shortage of energy supply has forced the government to import power on behalf of the crypto miners. A review of an October report demonstrated that the energy consumed in crypto mining activities reached 17 million KWh.
A statement from the industry leaders in Kyrgyzstan demonstrated that the increase in crypto mining activities in the region impacted energy crises. After multiple meetings to deliberate on strategies to address the energy crises, the president of Kyrgyzstan Sadyr Japarov proposed to increase tax tarrifs on households to curb electricity prices.
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