Bitcoin miners will have to pay 15% of any profit that they make. The low cost of electricity and the low temperatures in this Asian country favor mining.
Even though the Government of Kazakhstan had been hostile towards the miners of Bitcoin (BTC) and other cryptocurrencies, it now intends to promote mining in its territory. This mining promotion occurs after the enactment in June of laws that stipulate how they must pay taxes for their activity.
Miners will now have to pay 15% of the profits that they obtain as a product of the mining activity. The government explained that they will initially use the proceeds to alleviate the effects of the economic recession that the COVID-19 pandemic has caused.
Representatives of the Ministry of Digital Development negotiated with companies in the sector before deciding to promote the mining industry. They reported that they reached agreements with which they intend to attract investments of 300 billion tenges (KZT) equivalent to about USD 716 million.
According to local media, the Minister of Digital Development, Bagdat Mussin, said that thirteen mining farms in the country have already invested more than USD 190 million.
The dry climate and the long winters in which the temperature reaches -21 °C greatly benefit the operation of these farms. These conditions are ideal for cooling mining equipment, which led them to implement a filter system that reuses the cold air in the area.
Oil extraction and related industries are the main base of the economy of this Asian country. As a consequence, one of the main incentives for miners, in addition to the climate, is the low cost of electric power.
As a result of the current negotiations, there has been a paradigm shift government in terms of cryptocurrencies by the Kazakh. The situation was different two years ago when they were evaluating the ban on mining.
Daniyar Akishev, Governor of the Central Bank of Kazakhstan at that time, expressed the need to introduce restrictions for the exchange of cryptocurrencies for local fiat currency, the pricing of goods in cryptocurrencies, and their acceptance as means of payment.
Given that the legal prohibition of cryptocurrency mining never achieved approval in the corresponding government agencies, this allowed the farms to continue their activity.
During the new government, which Kasim-Yomart Tokaev has chaired since 2019, miners will not only continue within the law. Their task, which will now require paying taxes to the treasury, will be welcomed and promoted.
They Can Mine Bitcoin But Not Use It
Anyway, these pro-mining laws do not change in any way the existing legal restrictions on the use of cryptocurrencies, particularly of Bitcoin, in the Asian country.
The current legislation states that “virtual currencies are outside the legal spectrum and their use for transactions, especially with Bitcoin, on the territory of Kazakhstan, may have negative consequences for the people who conduct the said operations.”
Something similar happens in Russia and Vietnam, where people can have crypto assets but cannot use them as a payment method.
By Alexander Salazar