Kazakhstan’s Miners Write Letter to President, Makes Plea For Lower Energy Prices
Digital asset miners in Kazakhstan have written an open letter to President Kassym-Jomart Tokayev asking for lower energy prices.
According to reports from local media sources, eight major mining firms penned their signatures to the letter as more miners suspend their activities in the country.
The letter was signed by representatives of the following firms: BCD Company LLP, TT TECH Limited Private Limited Company, KZ Systems LLP, AI Solutions LLP, Zhambyl branch of Kinur LLC, Green Power Solution Ltd. Private Limited Company, VerCom LLP and KINUR INVEST LLP amid wider calls from the Association of Blockchain and Data Center Industry in the country.
“Today, all the largest representatives of the industry have suspended their activities and plan to completely cease their business in the Republic of Kazakhstan by the end of the year.”
The country ranked third in terms of Bitcoin mining hashrate and miners are saddened that new regulation imposed by the government has changed the status quo.
Per the letter, the country lost its share of the global mining volume from 14% in 2022 to 4% in 2023 adding that if things stay this way, the mining industry will cease to exist.
“Without understanding the specifics and economic issues, as well as the cost of digital mining, a differentiated system was introduced in 2023 with a fee rate of up to 26 tenge/kWh, the detrimental effect of which essentially destroys the industry and does not allow digital miners to optimize their activities to reduce costs,” the letter reads.
The miners urged the President to review the policy because as things stand, miners can barely stay afloat resulting in a stagnant industry despite claims of being crypto-friendly.
Kazakhstan’s harsh crypto taxes
Miners in Kazakhstan have written to the president to review the present tax code and address their energy concerns.
Presently, they claim that 80% of the cost of digital assets is used for generating electricity alone leaving less room for survival in the wake of the declining asset prices and an upcoming Bitcoin halving.
The country’s mining woes began with the influx of miners to the country following the Chinese ban skyrocketing the demand for miners from 500 MW to 1,500 MW causing a strain on energy demands and leading to high taxes on the sector.
While the industry remains at crossroads, policy watchers hope for the government to meet the miners in the middle for the survival of “dying companies.”
Globally, virtual asset mining has come under the regulatory hammer in several countries as they continue to cite climate concerns and the impact on national electricity supply.
In the United States, the Biden administration proposed a 30% mining tax asking the industry to pay its “fair share”, a move widely criticized by miners, crypto executives, and the community.