Despite the benefits of cryptocurrency, the process of creating the tokens has been a controversial topic that stretches across countries in the world due to the power-intensive nature of it and the fact that it is often expensive. Several people have been arrested for stealing power in order to mine cryptocurrency and recently, the Iranian government issued threats to take certain people off the national grid for taking advantage of subsidized power rates to mine crypto.
Now on August 28, 2019, the Ministry of the economy of Kyrgyzstan has announced a proposed bill that will implement taxation payments on crypto mining. This will be done via a new draft law that has been submitted to implement the taxation of cryptocurrency mining across Kyrgyzstan.
Money and Mining
The benefit of this new law is that it will increase budget revenues and also follows the principle of fair taxation in the Kyrgyzstan republic which is supported by several lawmakers and those in power. This will, however, increase the cost of mining in the sense that miners will have less money to take home due to the tax and thus puts a new layer of complexity towards both the government and the people in the crypto industry.
This, however, depends on what option the government decides upon as there are two possible scenarios. The first scenario is that the income from cryptocurrency is taxed and the second is that the expenses incurred as a result of crypto mining be taxed. That means that regardless of the option chosen, there will be more cost to miners. This is, however, going to be quite lucrative for the government as it is estimated that the government can make $4.2 million from this taxation which is a significant amount considering the fact that the country’s national budget is about $1 billion.
It should also be noted that’s the Kyrgyzstan government banned cryptocurrencies back in 2014 and the National Bank of the Kyrgyzstan republic also issued a statement claiming that the use of digital currencies was illegal. Despise this law, the industry has continued to thrive within the country with 80,000 crypto-related devices being in operation and since the industry cannot be stifled, it seems the government would rather regularize and tax it.