Kyrgyzstan raises electricity rates for cryptocurrency miners
Recently, the government of Kyrgyzstan revised its electricity tariffs to suit different groups of customers. Bishkek authorities have increased the prices at which crypto mining companies can buy power, citing the high-energy nature of the coin minting process.
Crypto Miners in Kyrgyzstan Will Pay More for Electricity
The price of electricity required to create digital currency will rise for crypto mining companies operating in Kyrgyzstan. This increase is due to a government decision that updated electricity rates across the board to “ensure stable and reliable functioning in the energy sector.”
According to an official announcement, the changes are part of the country’s Medium-Term Tariff Policy for Electricity (2021–2025), approved by the Cabinet of Ministers. “Mining entities (cryptocurrency)” is one of the 14 groups of end users affected by the revision. The base tariff for consumers in that category is calculated with a multiplying factor of 2.0, the published documents detail.
Crypto miners will pay a 2.52 Kyrgyzstani som (less than $0.03) for each kilowatt-hour of electricity they use. The new rate is the result of an increase of 12.5%, government numbers show. For the remaining four years of the period covered by the new tariff policy, prices will be adjusted each year to reflect the average level of annual inflation.
Authorities in Kyrgyzstan have listed crypto mining farms alongside enterprises in the gold mining industry and producers of alcoholic beverages as consumers that require significant power supplies. The revised tariffs for these users take into account the additional operating costs of the country’s thermal power plants as well as the costs of distribution, the government explained.
The region of Central Asia, where the Republic of Kyrgyzstan is situated, has become a hotspot for cryptocurrency mining, attracting miners with its low electricity rates. The government in Bishkek has been taking steps to regulate the growing industry.
In August 2020, the Ministry of Economics put forward a bill to introduce taxation for mining activities. The draft law proposes a 15% tax on the cost of electricity consumed to mint digital currencies. The legislation requires mining companies to apply for registration in order to operate legally in the country.
