While cryptocurrencies continue to get a hard time from regulators, governments across the globe are happy to accept certain aspects of this industry. The cryptocurrency mining industry is on the whitelist of several nations trying to seize the opportunity and embrace it as something with great potential.
Over the last few years, authorities have tried to foster the growth of this industry by creating a miner-friendly environment with the creation of new regulations and lowering electricity costs. Taxation laws are also being nerfed to attract miners, and this has helped create a billion-dollar industry.
Kyrgyzstan has been pondering upon the idea of deploying a tax regime for miners which would create the nation’s first regulated framework for crypto-related affairs. The authorities are considering a bill dubbed ‘Amending the Tax Code of the Kyrgyz Republic’ to tax and regulate the crypto mining industry.
The bill seeks to boost government revenue from cryptocurrency mining by implementing tax obligations for miners, while also clearly defining the terms ‘virtual assets’ and ‘mining’ in the context of cryptocurrencies.
This bill would be the first move towards cryptocurrency liberalization in the Kyrgyz Republic since the nation had banned cryptocurrencies as a means of payment back in 2014.
If the bill is passed, crypto miners would be taxed at flat 15% of profits generated from selling the mined crypto assets. Originally proposed in August 2019, the bill is expected to capture an additional $4.2 million toward the Kyrgyz Republic’s roughly $1 billion annual budget.
Besides new taxation rates, the authorities are also keen on implementing fresh electricity rate for miners. This is vital for developing the mining industry and attracting miners. The Supreme Council of the nation had suggested a rate of $0.05 per kilowatt-hour (KW/h), which is 70% steeper than the nation’s average price of roughly $0.030 per KW/h.
Regulators worried about the negatives of crypto mining
However, not all the lawmakers are in line with the idea of legitimizing the mining industry. Deputy Aaly Karashev noted the impacts of large-scale crypto mining on the nation’s electricity generation capabilities, which is quite limited. Furthermore, the country also imports nearly twice the power it exports.
On the other hand, Deputy Natalia Nikitenko stressed on the illegal mining operations still in play, despite the nation’s efforts to suspend mining activities back in September 2019. It is yet to be seen whether the bill actually comes into play.
As previously reported by The Daily Chain, Iran’s President Hassan Rouhani recently called for a new strategy for the emerging crypto mining industry. Rouhani has asked officials to draft a miner friendly scheme that would include the nation’s policy towards mining farms located within the country, along with the taxation laws related to this sector.
