Hydropower-Rich Kyrgyzstan Faces Cryptocurrency Tax Decline in 2024

According to a budget document by Kyrgyzstan’s Ministry of Economy and Finance, mining taxes contributed 46.6 million Kyrgyzstani soms, equivalent to about $535,000, to the national budget this year.

This figure is a drop from the 93.7 million soms, approximately $1 million, collected in 2023, marking a decrease of over 50%.

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Cryptocurrency miners in Kyrgyzstan are taxed at a flat rate of 10% on their electricity usage. This rate includes additional taxes such as value-added tax and sales tax.

The country’s potential for renewable energy, particularly hydropower, has made it an attractive location for mining operations. According to the International Energy Agency, only 10% of the country’s hydropower capacity is currently being used.

This untapped resource offers affordable and renewable energy, which is highly appealing for energy-intensive cryptocurrency mining.

Hydropower accounts for over 30% of Kyrgyzstan’s energy supply, but only a small portion of its potential has been developed.

Despite these advantages, the decline in tax revenue highlights challenges faced by the industry in Kyrgyzstan. Factors such as fluctuating energy prices, operational costs, or market conditions may have influenced the drop.

As Kyrgyzstan faces a drop in crypto mining tax revenue, Brazil recently proposed banning stablecoin transfers to self-custodial wallets. What's driving this decision? Read the full story.