Victor Ugochukwu · Dec 14, 2020 . 5min read
Kazakhstan Taxes Crypto Mining to Combat Covid-19 pandemic
The federal government of Kazakhstan imposes a 15% flat-rate tax on crypto mining, which will help to combat covid-19 pandemic.
By Komal Joshi · Aug 7, 2020 . 6min read
The federal government of Kazakhstan imposes a 15% flat-rate tax on Crypto mining. The proposition intends to utilize any funds raised through the tax to manage the nation’s COVID-19 emergency. Forbes announced through a post that the Ministry of the Economy requires combating Covid-19 pandemic impact on the nation’s economy. It plans to accomplish this by the collection of such taxes.
Scope of Cryptocurrencies in Kazakhstan
The governor of Kazakhstan’s leading financial hub, the Astana International Financial Center, claimed support to crypto and blockchain innovation. However, it demonstrated the need to regulate cryptocurrencies in 2018. In May 2019, the AIFC associated with blockchain tech giant Bitfury. It helped and cooperated on blockchain applications over several industries.
Kazakhstan’s lawmakers won’t be taxing crypto mining until the mined crypto is swapped for fiat money. Cryptocurrency mining will not be treated as an entrepreneurial activity but rather a “purely technological process, according to a legislative analyst at a local blockchain association,” local business publication Kursiv reported Dec. 4, 2019.
This signifies a departure from the country’s recent announcements, which recommended several positions from the nation. The Cambridge Center for Alternative Finance at the Judge Business School of the University of Cambridge designed the Bitcoin mining app. It reveals that the CIS region’s countries comprise the fourth largest region for crypto mining across the globe. In Q2 2020, mining in Kazakhstan has made up about 6.17% of the average monthly Bitcoin hash rate. Thus, it is slightly behind Russia (6.9%) and the United States (7.24%). However, China remains the undisputed king (over 65%).
Does Electricity Prices Supports Crypto Mining
The price of electricity in the nation was $0.041 per kilowatt-hour for households. Additionally, for businesses, the price was $0.049. The cost of electricity is in accordance of December 2019. Consequently, the cost of electricity has been one of the prominent factors in cryptocurrency mining. According to Forbes, the federal government wants to regulate crypto mining activities following brand-new electrical power tariff guidelines.
The main attraction for crypto miners is not the regulatory framework. Amongst miners, the source of fascination remains the abnormally cheap electricity rates. Moreover, the built-up tax earnings would combat the Covid-19 pandemic’s impact on Kazakhstan’s economy.
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