Mining revenues in Kyrgyzstan decrease by half
In the heart of Central Asia, Kyrgyzstan has emerged as a significant player in the global cryptocurrency mining scene, thanks to its abundant hydropower resources.
Last year, a 120 MW cryptocurrency mining farm was established at a hydropower plant, making it the largest of its kind in the country. This farm contributes to Kyrgyzstan's budget, although there has been a decrease in contributions from 2023 to 2024.
The tax regime for cryptocurrency mining in Kyrgyzstan is unique. Miners are subject to a tax on electricity consumption costs, with the tax rate set at 10% of electricity consumption costs, including VAT and sales tax. In 2023, this resulted in tax payments of over $1 million, while in 2024, the contributions amounted to approximately $535,000.
Despite the potential for utilising more of its hydropower capacity for cryptocurrency mining, only 10% is currently being used. This leaves a significant unused capacity, a portion of which is now being utilised by the newly established mining farm.
Kyrgyzstan's interest in cryptocurrency mining is driven by its surplus hydroelectric power. However, the regulatory environment is not fully developed, with the government's support described as lukewarm. There is no concrete data available about the current tax rate or the revenue from cryptocurrency mining taxes in Kyrgyzstan.
Recent developments include the imposition of sanctions by Britain on Kyrgyzstan-based financial entities, which could impact the financial stability and perception of the country's crypto environment.
In June 2023, the president of Kyrgyzstan allowed the creation of the 120 MW mining farm at a hydropower plant. Despite this, the new electricity tariffs for cryptocurrency mining activities have not been mentioned as affecting the decrease in contributions to the budget from 2023 to 2024.
The International Energy Agency continues to provide information about Kyrgyzstan's energy sector, including the establishment of cryptocurrency mining farms. However, there is limited specific information in the search results about the revenue from cryptocurrency mining taxes in Kyrgyzstan over the past years.
[1] Source: Various online articles and reports from the International Energy Agency.
The unique tax regime in Kyrgyzstan imposes a 10% tax on electricity consumption costs for cryptocurrency miners, contributing significantly to the country's budget – over $1 million in 2023 and approximately $535,000 in 2024. Within the technology and finance industries, the country has showcased its potential with the establishment of a 120 MW cryptocurrency mining farm, leveraging its abundant hydropower resources in the industry sector.
