Kyrgyzstan is experiencing a cryptocurrency mining boom that is translating into higher tax revenues for the Central Asian nation.
Tax Revenues From Crypto Mining on the Rise
According to Kyrgyz officials, the government is on track to collect over $1 million in taxes from crypto mining operations in 2023 – a substantial increase from previous years.
The country’s finance ministry has already collected $900,000 in tax revenues from crypto mining in the first 11 months of 2023. In August alone, the ministry received over $132,000 in mining taxes, suggesting notable growth in the industry within Kyrgyzstan.
Tax payments from crypto mining started to rise noticeably in the second quarter of the year, with $8,300 collected in February and a sharp increase to $47,200 by April.
Utilizing Hydro Resources
Kyrgyzstan Energy Minister Taalaibek Ibraev indicated that many crypto mining farms are associated with small hydroelectric power station owners.
Like Costa Rica and Paraguay, Kyrgyzstan generates a significant portion of its electricity from hydro resources. However, only 10% of its estimated 142 billion kWh hydro potential is currently being utilized.
Nearly 90% of Kyrgyzstan’s electricity is sourced from hydropower, making it an appealing location for sustainable crypto mining operations.
Russian CBDC Plans May Boost Mining
Russian officials are planning to initiate cross-border trade using a central bank digital currency (CBDC) within the Eurasian Economic Union, which includes Kyrgyzstan, targeting a 2024 launch. This could boost mining activity further.