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Crypto-related Bill Approved in Kazakhstan

According to a new law passed by the Kazakhstan legislature, cryptocurrency miners will need to have certain licenses to operate in the country. This new bill, prepared to create a regulatory framework for cryptocurrencies, was approved after it was read in the parliament. It was stated that the approved bill was prepared at the request of the country’s President Kassym-Jomart Tokayev and then presented to the parliament.

The President’s proposal includes licensing the cryptocurrency exchanges operating in the country and bringing these newly formed financial institutions under control. In this context, the authorities plan to oblige the cryptocurrency miners operating in the country to exchange 75% of their income on domestic platforms, starting from 2024. In other words, the government wants to collect taxes from these high incomes from miners and cryptocurrency exchanges. Because currently, mining enterprises only have to pay taxes on the electricity they use, depending on the amount and price of the energy they use. Miners do not face any other fees. However, this situation is expected to change with the new law.

As it is known, Kazakhstan has become the focal point of mining companies fleeing the country after China’s bans, due to its cheap energy supply. However, the intense interest of the miners in the country caused a growing power deficit in Kazakhstan. Due to the inability of the country’s existing electricity infrastructure to cope with the intensity, increases in power outages began to occur. Then some mining companies came to the point of closure. Ekaterina Smyshlyaeva, a member of the Mazhilis Economic Reform and Regional Development Committee, made a statement regarding this negative situation:

“The introduction of legal mechanisms to control electricity use in the industry is another important goal for those in charge of the bill. In addition, the Department of Energy should set energy quotas for mining to keep the balance of the country’s energy supply system.”

The Central Asian country, Kazakhstan, continues to make progress in cryptocurrency mining. Over the last year, the country has become the third country in the world in Bitcoin mining, leaving Russia behind.

The United States (37.84%) remains the leader in cryptocurrency mining. China (21.11%) comes in second place, followed by Kazakhstan. The country currently contributes 13.22 percent of the total Bitcoin hashrate.

According to data from the Cambridge Center for Alternative Finance, Kazakhstan’s contribution to the absolute hash rate (monthly average) is 24.8 exahash per second (Eh/s). In addition, it is stated that the leading country USA contributed 71 Eh/s and China 39.6 Eh/s.

In fact, Kazakhstan is known as a country that is highly dependent on energy. The intense interest of the miners in the country caused a growing power deficit in Kazakhstan. Due to the inability of the country’s existing electricity infrastructure to cope with the intensity, increases in power outages began to occur. Then some mining companies came to the point of closure. The International Energy Agency (IEA), co-financed by the European Union, listed Kazakhstan’s needs for different resources in a report it published. It is stated that the country is heavily dependent on non-renewable energy such as oil (over 50%), coal (28%) and natural gas (17%).

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