The government of Kyrgyzstan has recently revised its electricity tariffs for various groups of consumers. Authorities in Bishkek have raised the rates at which crypto mining businesses buy power citing the energy-intensive nature of the coin minting process.
Crypto Miners in Kyrgyzstan to Pay More for Electricity
Companies operating crypto mining facilities in Kyrgyzstan will have to pay a higher price for the electrical energy they need to mint digital currencies. The increase follows a government decision to update electricity rates across the board in order to “ensure the stable and reliable functioning of the energy sector.”
According to an official announcement, the changes are part of the country’s Medium-Term Tariff Policy for Electricity (2021–2025), approved by the Cabinet of Ministers. “Mining entities (cryptocurrency)” is one of the 14 groups of end users affected by the revision. The base tariff for consumers in that category is calculated with a multiplying factor of 2.0, the published documents detail.
Crypto miners will pay a 2.52 Kyrgyzstani som (less than $0.03) for each kilowatt-hour of electricity they use. The new rate is the result of an increase of 12.5%, government numbers show. For the remaining four years of the period covered by the new tariff policy, prices will be adjusted each year to reflect the average level of annual inflation.
Authorities in Kyrgyzstan have listed crypto mining farms alongside enterprises in the gold mining industry and producers of alcoholic beverages as consumers that require significant power supplies. The revised tariffs for these users take into account the additional operating costs of the country’s thermal power plants as well as the costs of distribution, the government explained.
The region of Central Asia, where the Republic of Kyrgyzstan is situated, has become a hotspot for cryptocurrency mining, attracting miners with its low electricity rates. The government in Bishkek has been taking steps to regulate the growing industry.
In August 2020, the Ministry of Economics put forward a bill to introduce taxation for mining activities. The draft law proposes a 15% tax on the cost of electricity consumed to mint digital currencies. The legislation requires mining companies to apply for registration in order to operate legally in the country.
Do you think Kyrgyzstan will maintain its electricity rates low enough to continue to attract cryptocurrency miners? Tell us in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Be the first to comment