Tax revenue from cryptocurrency mining modest but growing in Kyrgyzstan

The government of Kyrgyzstan collected 78.6 million soms (almost $883,000) in taxes from cryptocurrency miners in the first 11 months of 2023, according to local press reports citing the Finance Ministry.

Tax revenue from crypto mining was volatile in Kyrgyzstan in 2023, ranging from 738,000 soms ($8,284) in February to 11.6 million soms ($130,212) in August. In November, the last month reported, receipts were flat at 7.6 million soms ($85,767) after falling from the August high. There is only one cryptocurrency mining company now operating officially in Kyrgyzstan, although there were once many more.

Crypto mining tax revenue for the first 11 months of 2022 amounted to 11.1 million soms ($133,200). The tax rate is 10% of the cost of electricity, including value-added and sales taxes.

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Kyrgyzstan has tremendous water resources in the form of glaciers, high-altitude lakes and rivers, which have an aggregate length of over 35,000 km., according to the government, but most of those resources remain highly underdeveloped. Crypto miners in the country rely on hydropower.

Thousands of young Kyrgyz people are learning to code as the country strives to develop its tech economy.@ashleevance meets 2 of them. More on Hello World:

— Bloomberg Technology (@technology) December 30, 2023

Kyrgyz President Sadyr Japarov approved the building of a crypto mining facility at the Kambar-Ata-2 Hydro Power Plant in July 2023. Crypto miners are charged a rate five times higher than the public in Kyrgyzstan.

Cryptocurrency production was inhibited in 2023 by the low fill level at dams and delivery limitations due to contracts with neighboring countries. Miners were forced to import power, and sometimes the government was as well. Kyrgyzstan’s crypto miner had difficulties even finding imported power at times. Nonetheless, the industry had consumed 17 million KWh of electricity by the beginning of October 2023.

Energy use by crypto miners has been controversial for years. Cryptocurrency exchanges are legal in the country, but the circulation of cryptocurrency is not regulated.

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