Kazakhstan bitcoin mining has dramatically surged into third place on the global market as the country’s share reached 8.2 percent of Global BTC mining, reported by Cambridge Centre for Alternative Finance.
Recently, the Astana International Financial Center (AIFC) announced its pilot project on opening cryptocurrency bank accounts in the country. With this law Kazakhstan citizens will soon be able to buy bitcoins, convert their income into cash, and sell crypto on exchange markets.
On June 25, Kazakhstani President Kassym-Zhomart Tokaev signed legislation officially legalizing crypto-mining in Kazakhstan. As part of this law, Kazakhstan introduced a new tax, stipulating a fee of one tenge per 1 kilowatt-hour (kW/h) for miners, starting on January 1, 2022.
This legislative decision could be interpreted not as a barrier for the migration of new miners to Kazakhstan but as a necessary measure taking into account the processes of tightening control over miners.
The Kazakhstani government intends to support crypto-currency mining operations by introducing the lowest taxation rate among major crypto-currency mining countries.
This has already produced a surge of activity. As of August, Kazakhstan hosted 25 crypto farms, many of them recent migrants from China.
In the wake of the Chinese government’s crackdown, the Shenzhen-based BIT Mining Ltd., a crypto-currency mining company that provides cloud mining equipment rental services, announced the suspension of its operations in China and later stated that it had transferred 320 machines with a Bitcoin net hashrate performance of 18.2 PH/s, from China to Kazakhstan. It additionally plans to shift another 2,600 pieces of equipment in the near future. The move to date cost $9 million, but the company is so certain of its future in Kazakhstan that it has raised $50 million for future operations there from investors through a private placement.
Another Chinese company has also begun to increase its digital footprint in Kazakhstan. Canaan, one of the world’s largest manufacturers of ASIC bitcoin mining computer equipment, after opening its first overseas after-sales service center in the country, announced that it was delivering on its 2021 strategic plans by driving its crypto-mining business in Kazakhstan. The firm stated it is delivering and operating the latest Avalon Miner units in Kazakhstan and is ready to service associated crypto-mining equipment there.
At a cost of approximately $0.03–0.04 per kW/h (depending on the tenge-dollar exchange rate), electricity tariffs in Kazakhstan are among the cheapest in the world. Kazakhstan’s largest crypto-mining rivals charge $0.06 per kW/h (Russia), $0.08 per kW/h (China) or as much as $0.09–0.12 per kW/h (USA).
An important aspect of the increased bitcoin mining in Kazakhstan is that the growing crypto mining industry relies primarily on fossil fuels, which might present future difficulties considering the country’s dedication to expanding its renewable energy sources and pivoting towards a greener economy by 2030.
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