Two months ago, China recognised mining as an unwanted activity. This caused a record slump in the hashrate and a migration of miners to more welcoming countries. They did not have to go far: neighbouring Kazakhstan seized the opportunity that fell in its lap.
The shutdown of Chinese mining rigs led to a power decrease in the Bitcoin network from 190 EH/s to 70 EH/s. However, starting the second week of July, the value began to grow, currently sitting at 108.8 EH/s. The hashing power began to grow because Chinese miners started to deploy their mining equipment in other countries. For instance, BTC.com, the biggest mining pool from the Sichuan province, is moving to Kazakhstan, a choice that wasn’t accidental: Kazakhstan shares a border with China, provides cheap electric energy and is open to host cryptocurrency miners.
Kazakhstan increased its share in the world’s hashrate from 4% to 7%, and the new legal framework can make this country the crypto capital. For instance, crypto exchanges registered in the Astana International Financial Centre will soon start to work with local banks, and citizens will be able to buy and sell cryptocurrency. This is currently just a pilot project, and the operations on the exchanges will be available for legal entities only.
According to the chief coordinator of the Blockchain Association in Kazakhstan, Sergei Putra, the daily volume of cryptocurrencies equates to billions of dollars. If the country manages to acquire 1% of this volume, this money will go to Kazakhstan in the form of investments, taxes and wages.
The miners will also contribute to the treasury. Starting from 2022, an additional fee of 1 tenge will be charged for every kilowatt used. With the current consumption level of 3.5 TW/h, the revenues will constitute 3.5 billion tenge or about $ 8.225 million per year.
Kazakhstan is taking its first steps towards officially recognising cryptocurrencies. We hope this experiment’s success and tax growth will lead to a mainstream integration of new products.
