Cryptocurrency mining in Kyrgyzstan faces 50% drop in tax revenue in 2024

In 2024, Kyrgyzstan saw a sharp decline in tax revenues from cryptocurrency mining, despite a global rise in cryptocurrency valuations. The country, known for its abundant hydroelectric resources, saw tax revenues from cryptocurrency mining drop by 50% compared to the previous year.

How does Kyrgyzstan tax cryptocurrency mining?

According to A a report According to the Ministry of Economy and Finance, Kyrgyzstan collected just 46.6 million Kyrgyzstani soms (about $535,000) in mining taxes this year, a significant decrease from the 93.7 million soms ($1.08 million) collected in 2023.

The decline was evident early on, with revenues down 29.7% during the first seven months of 2024 compared to the same period in 2023.

Kyrgyzstan imposes a 10% tax on electricity used by cryptocurrency miners, which also includes value-added tax (VAT) and sales tax. This tax model initially helped boost revenues, especially during the early stages of 2023.

At the time, the country announced a significant increase in mining taxes, collecting 78.6 million soms ($883,000) in the first few months, far exceeding the 11.1 million soms ($133,200) collected during the same period in 2022.

What is behind the decline?

The reasons for the sharp decline in mining tax revenues remain unclear. Some suggest that regulatory uncertainty or a decline in mining activity may have contributed.

In addition, Kyrgyzstan’s affordable hydropower has made it an attractive place for cryptocurrency miners, but recent changes in energy policies or costs may have affected this sector.

• Read also:
• The Blockchain Association is suing the IRS over new DeFi regulations
• ,

New mining opportunities

Despite the decline in tax revenue, there are ideas around the world to improve cryptocurrency mining. In Germany, for example, Miners use additional renewable energy To power Bitcoin operations, which helps reduce energy waste and stabilize power grids.

Countries like Kyrgyzstan could explore similar solutions to boost the sector while supporting their economy.

This decline in tax revenues poses a challenge for Kyrgyzstan, but it also opens doors to rethink strategies and create a more sustainable future for Kyrgyzstan. Cryptocurrency mining.

Frequently asked questions