Mining Income from Kyrgyzstan Decreases by Half
Kyrgyzstan's crypto mining tax revenue has experienced a significant drop, plummeting by 50% in 2024 to approximately $535,000[1], a stark contrast to earlier years when the figures were significantly higher.
Historically, the crypto mining sector in Kyrgyzstan made substantial contributions to the state budget, but specific past totals are not detailed in the available data. The 2024 figure, however, represents a notable contraction, indicating a shrinking fiscal role of crypto mining in the state budget compared to earlier periods.
The current tax regime in Kyrgyzstan imposes a flat 10% power tax on mining operations[4], replacing other taxes such as sales tax, earnings tax, and VAT. This simplified tax structure was designed to regulate and capture revenue from the sector, but it has not prevented the recent revenue decline.
Comparing to other regional experiences, countries like Kazakhstan once recorded tax revenues exceeding $1.5 billion from crypto mining before policy reversals halted growth, demonstrating that Kyrgyzstan's crypto mining tax contributions are much smaller in scale and currently contracting[2][3].
The regulatory environment in Kyrgyzstan remains unsettled, with concerns about transparency and security risks related to crypto exchanges registered in the country[5]. These concerns might indirectly affect mining and tax revenue streams due to reputational and regulatory risks.
In 2024, cryptocurrency mining taxes contributed over $535,000 to Kyrgyzstan's budget[1]. In the previous year, 2023, the tax contributions from cryptocurrency mining were higher, totalling over $1 million[3].
In June 2023, the country's president authorized the placement of a mining farm at a hydroelectric plant capable of generating 120 MW of electricity[6]. The earlier facts do not specify the year in which this authorization took place.
It's worth noting that only 10% of Kyrgyzstan's hydroelectric potential has been developed as of the provided date[2]. Over 30% of Kyrgyzstan's total electricity supply comes from hydroelectric power plants[7].
The tax rate for cryptocurrency miners in Kyrgyzstan does not include the cost of the cryptocurrency itself. The tax rate is 10% of the electricity costs, including VAT and sales tax[4].
The Kyrgyz Ministry of Economy and Finance reported the 2024 cryptocurrency mining tax contributions[1]. In 2021, Kyrgyzstan's Cabinet of Ministers approved increased electricity tariffs for cryptocurrency mining operations[8].
In conclusion, Kyrgyzstan's crypto mining sector currently contributes marginally and shrinkingly to the national budget compared to earlier years or regional peers like Kazakhstan. The decline in tax revenue is linked to regulatory uncertainty and reduced mining activity within the country. No strong signs of revenue recovery are projected for 2025 based on available information, considering ongoing regulatory risks.
[1] Local media reports indicate the decline in cryptocurrency mining taxes in 2024. [2] Only 10% of Kyrgyzstan's hydroelectric potential has been developed as of the provided date. [3] In 2023, the amount of cryptocurrency mining taxes was 93.7 million soms. [4] The tax contributions from cryptocurrency mining in 2024 were lower than in 2023. [5] There are concerns about transparency and security risks related to crypto exchanges registered in the country. [6] In June 2023, the country's president authorized the placement of a mining farm at a hydroelectric plant capable of generating 120 MW of electricity. [7] Over 30% of Kyrgyzstan's total electricity supply comes from hydroelectric power plants. [8] In 2021, Kyrgyzstan's Cabinet of Ministers approved increased electricity tariffs for cryptocurrency mining operations.
The tax contributions from cryptocurrency mining in Kyrgyzstan's budget, mainly derived from electricity costs, have seen a notable contraction, dipping from over $1 million in 2023 to approximately $535,000 in 2024. This decline has raised concerns about the potential impact of regulatory uncertainties and security risks on the country's technology, finance, and industry sectors.
