But in 2024, crypto mining tax revenue in Kyrgyzstan has slumped by almost half compared to the year before. The government, based on information provided by its Ministry of Economy and Finance, collected only 46.6 million Kyrgyzstani soms ($535,000) in cryptocurrency mining taxes this year. It is a considerable drop from last year’s tax receipts 93.7 million soms (about $1.08 million).
Concern has already been raised as revenue falls, largely because the country has long been seen as a crypto mining hub due to its huge hydroelectric resources and cheap electricity. According to local media outlet 24.kg tax receipts from crypto miners have been falling since August, with a nearly 30 percent decline in the first half of 2024 compared to the same period last year.
Kyrgyzstan’s Crypto Mining Tax Revenue Surprises Decline
Despite the fact that Kyrgyzstan is famed as a crypto mining haven, owing to its untapped renewable energy asset, it’s surprising that its tax take would fall, unless in the period surrounding that date it had embarked on a bolder crackdown. Compared with last year’s crypto mining tax revenue, the Kyrgyz government registered a strong increase in tax collections in 2023.
Collecting 78.6 million soms (a total of $883,000), figures for the first months of 2023 alone represent a massive boost for the country, which collected just 11.1 million soms ($133,200) during the same period one year earlier.
Value Added Tax (VAT) and Sales Tax already have been factored in to the government’s crypto mining tax rate, which stands at around 10 percent of the electricity fee used by miners. However, the resulting sharp year-over-year tax revenue fall suggests that the drop in activity in Kyrgyzstan’s crypto mining sector is more than just the product of the movement of miners from Kazakhstan to Russia.
The country should have plenty of hydroelectric resources for such growth, yet industry experts are left to speculate about the reasons for the downturn. But the reasons behind the decline in tax collections are unclear, and authorities have so far offered no more reason. In Kyrgyzstan, the government’s 2024 report on the industry will be examined closely to see if this decline is temporary or permanent to the country’s crypto mining scene.
