Kazakhstan tightens laws on cryptocurrency mining

In particular, the country is planning the introduction of a tax and the possession of a compulsory license for companies that mine cryptocurrencies.

Kazakhstan, one of the world’s leading producers of cryptocurrencies, will tighten its laws regarding the virtual currency creation industry, an energy-intensive process in Central Asia’s largest state, plagued by regular blackouts. The Majilis, the lower house of parliament, passed a bill on Wednesday, which in particular provides for the introduction of a tax and the holding of a compulsory license for companies that mine cryptocurrencies, according to the official Kazinform news agency. .

In recent months, the country, the region’s leading economy, has shown itself inclined to promote the expansion of this activity while hardening the tone against illegal mining, where the computers necessary for this industry are gathered. “The goal is to eliminate illegal mining and create an appropriate legal environment for entrepreneurs“, Deputy Ekaterina Smychlaïeva, initiator of the bill, declared to AFP on Thursday, adding that this activity “is capital intensive with very high risks“.

Mining must be placed“and”miners will only be able to buy power from the common power grid if there is a surplus“, she said on Wednesday, quoted by Kazinform.

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According to data from the University of Cambridge, which regularly conducts research on cryptocurrencies, in January 2022, Kazakhstan was the third largest producer of virtual currencies with 13.22% of activity, after the United States (37.84%) and China (21.11%). ). Kazakhstan has many advantages for mining, with one of the cheapest electricity prices in the world and a cold climate that makes it easier to cool computers. Kazakhstan, more than five times the size of France, has also benefited from the arrival of miners leaving China, a neighboring country where the industry has been officially banned.

In March, the Kazakh government announced the closure of around 100 illegal mining operations, some of which belong to the former president’s brother, the all-powerful Nursultan Nazarbayev. Kazakhstan’s energy system dates back to the Soviet era and, despite investment, remains dilapidated, causing regular outages.

In order to mine cryptocurrencies – an activity open to anyone on a decentralized network – multiple computers must solve complex mathematical calculations to be rewarded through the issuance of virtual currency. But this process requires high computing power – or hash rate – to run computers, and according to Cambridge University estimates, it consumed 0.6% of global production in 2021.

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