This Government Was Able To Earn $1.5 Million From Bitcoin Mining, But Restricted It

This Government Was Able To Earn $1.5 Million From Bitcoin Mining, But Restricted It

Key facts:
  • A bill proposes to increase the electricity tariff for Bitcoin miners in Kazakhstan.

  • “Most of the expected amount from Bitcoin miners was not received,” the government said.

The Kazakh government reported on Monday that Bitcoin (BTC) mining may have earned them more than $1.5 million in profits during the first quarter of this year. But the funds stopped being received because they decided to restrict the activity.

In a Press release published on the official page of the Kazakh government, they let it be known that, during the first three months of 2022, Bitcoin mining would have added 652 million tenge (the local currency) to the republican (state) budget. These are just over one and a half million US dollars.

As explained, said sum of money would have reached the coffers of the State through the energy paymentwhich is the main fuel for mining machines to carry out their operations.

The Kazakh government specified that the payment for Bitcoin mining would have come from 12 regions of the Asian country, that together they would have contributed the aforementioned amount of money available to the State.

This Government Was Able To Earn $1.5 Million From Bitcoin Mining, But Restricted It
The Kazakh government may have profited from Bitcoin mining. Font: Wikipedia.

A blank check?

Although it is a considerable number that was left behind by the miners, the Kazakh government cannot fully access it due to restrictions against activity. In fact, it seems that they missed out on profiting from Bitcoin mining.

In the press release they emphasize that in order to guarantee the “energy security” of that country, most mining companies have been disconnected from the electrical system. This has been the case since October 2021, “so that most of the expected amount was not received by the budget.”

In CriptoNoticias we have reported several cases. In March, for example, it became known that the government had dismantled nearly 100 apparently clandestine Bitcoin mining farms, in the midst of a crusade to alleviate the energy crisis that was being experienced at that time.

They also highlighted the large miners who preferred to disconnect and leave Kazakhstan in the face of increased regulations and state surveillance, added to the political instability that came to directly affect the global computing power of the Bitcoin network.

More regulation at the door

In the press release, the Kazakh government indicated that a bill is currently being considered before the Parliament of the Republic of Kazakhstan, where an increase in the rate that is imposed on Bitcoin miners is explicitwhich could further hinder the free development of the activity.

This, despite the fact that Binance, one of the largest bitcoin exchanges in the market, reported that it was going to advise the Kazakh government on the regulations of the ecosystem.

This Government Was Able To Earn $1.5 Million From Bitcoin Mining, But Restricted It
A law related to bitcoin and the rest of the ecosystem is being discussed in the Parliament of Kazakhstan. Font: Global Voices.

It is good to clarify that, right now, electricity for miners costs 1 Kazakhstani tenge (or USD 0.0023) for each kWh of electricity that has been consumed by a Bitcoin mining farm, according to the Kazakhstan government itself. .

Raising the electricity rate for miners in Kazakhstan would imply a blow to the operators, since the increase in the service would add to the low profitability that Bitcoin mining is providingwhich has been in the red for weeks and averages not seen since 2020.

the impact is felt

Although it is true that Kazakhstan welcomed many of the miners who fled China after the ban on the activity, it is also true that this country quickly sought a way to counteract the trend, applying an increase in electricity rates as a first containment measure.

This has caused that, after holding second place among the countries with the highest hash rate enabled, now Kazakhstan has been moved to third place, where it was in July last year.

According to the University of Cambridge, this country is home to the 13.22% of the global hashrate, a drop of 5% since the migration began, back in September. Right now, this country is behind the United States (37.84%) and China (21.11%). Although that doesn’t matter. Kazakhstan remains an important country for miningor at least that’s what the Cambridge numbers show.

But, as the facts show, the more restrictions in Kazakhstan advance, the more likely it is that the government will not see the funds that the mining industry is able to leave behind..

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