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Cryptocurrency miners in Kazakhstan are facing a significant challenge as energy prices surge, threatening the viability of their operations. Several prominent mining companies, including BCD Company and AI Solutions, have written an open letter to President Kassym-Jomart Tokayev, expressing their concerns and warning of the potential collapse of the industry.
The key issue addressed in the letter is the rising energy tariffs, which are making cryptocurrency mining increasingly unprofitable in Kazakhstan. Miners warn that if the current situation continues, they will be forced to halt their operations by the end of the year.
The letter also highlights the disconnect between the government's efforts to create a regulated framework for cryptocurrency mining and the adverse impact of the energy price hikes. The miners argue that the government's decision to raise taxes on energy specifically for crypto miners has had unintended consequences, pushing Kazakhstan further away from competing with crypto mining powerhouses like China and Russia.
In terms of numbers, miners in Kazakhstan currently pay around $0.067 per kilowatt-hour (kWh) of electricity, even with the increased tariffs. While this is still lower than the average electricity cost for miners in the United States, it remains a significant burden on their operations.
In early 2022, Kazakhstan implemented a tax policy targeting digital miners, linking taxes to their electricity consumption. This move came in response to public dissatisfaction with the crypto mining industry's contributions to the country's finances. The government reported collecting approximately 3.07 billion tenges (around $7 million) in taxes from miners in 2022.
Industry leaders in Kazakhstan believe that without immediate and substantial government intervention, the future of cryptocurrency mining in the country is at risk, and the industry may face obsolescence.
