Crypto mining in Kyrgyzstan, a country that has drawn attention in this field, has seen a significant development. According to local news reports, the Kyrgyz government collected tax revenue worth 883,000 dollars or 78.6 million som from crypto miners operating in the country during the first 11 months of 2023. The taxes collected during this period saw a notable increase compared to previous years.
Notable Increase in Tax Rates
In Kyrgyzstan, the tax revenue generated from crypto mining in 2023 varied from 8,284 dollars or 738,000 som in February to as much as 130,212 dollars or 11.6 million som in August. In the last reported month, November, receipts settled at 85,767 dollars or 7.6 million som, after dropping from the highest level seen in August.
The country, which offers significant benefits to mining companies, especially with its cheap electricity, currently has only one officially operating crypto mining company. The tax revenue from crypto mining for the first 11 months of 2022 was 133,200 dollars or 11.1 million som. The tax rate in the country corresponds to 10% of the cost of electricity, including value-added and sales taxes.
According to the government, Kyrgyzstan has tremendous water resources in the form of glaciers, high-altitude lakes, and rivers, totaling over 35,000 km, but despite being underdeveloped, crypto miners in the country rely on hydropower.
Kyrgyzstan and Crypto Mining
Kyrgyzstan’s President Sadyr Japarov approved the establishment of a crypto mining facility at the Kambar-Ata-2 Hydroelectric Power Plant in July 2023. Crypto miners are taxed at a rate five times higher than that of the Kyrgyz people.
Bitcoin production in 2023 was hindered by low reservoir levels at dams and delivery limitations due to contracts with neighboring countries. Miners had to import power, a step in which the government also participated. Crypto miners in Kyrgyzstan occasionally struggled to find imported power.
Furthermore, by the beginning of October 2023, the sector had consumed 17 million kWh of electricity. Energy usage by crypto miners has been a topic of debate for years, and despite the legality of crypto exchanges in the country, there is no legal regulation for the crypto market.
