Kazakhstan Imposes Higher Fees on Crypto Miners to Balance Electricity Consumption

• Kazakhstan has begun to impose higher electricity fees on cryptocurrency miners since the beginning of 2023.
• The fee is calculated according to a progressive scale and can reach up to 25 Kazakhstani tenge (over $0.05) per kilowatt-hour (kWh).
• The influx of crypto miners has been blamed for the country’s growing electricity consumption.

Kazakhstan has recently announced that cryptocurrency miners operating in the country will be paying higher electricity fees starting from the beginning of 2023. This decision was taken with a bill amending the country’s Tax Code, which was signed into law in July 2022. The new fees for power consumption are calculated according to a progressive scale, and are based on the average price of electricity consumed by a miner during a given tax period. The minimum rate of 1 Kazakhstani tenge (over $0.002) per kilowatt-hour (kWh) can go up to 25 tenge (over $0.05).

The introduction of these new fees comes as a result of the influx of mining companies in Kazakhstan after China’s crackdown on crypto mining in 2021. These mining companies were attracted by the country’s low, subsidized electricity rates. However, the heavy power consumption of these companies has been blamed for the growing electricity consumption in the country.

In order to incentivize the use of renewable energy sources, the government has decided to offer the lowest rate of 1 tenge to crypto farms using renewable energy, not taking into account the cost of the electricity. For energy produced from other sources, the cheaper the power utilized, the heavier the tax burden.

The introduction of these new fees is meant to ensure that the cryptocurrency miners in Kazakhstan are not taking advantage of the country’s subsidized electricity rates. It is hoped that this decision will help to balance the energy consumption of the industry, and will ensure that the costs are equally shared between the government and the miners.