In 2024, Kyrgyzstan’s economy saw a significant drop in revenue from taxes on cryptocurrency mining despite the skyrocketing crypto valuation. The largest landlocked country has seen a 50% YOY in tax revenue this year.
As per the budget document from the Kyrgyzstan Ministry of Economy and Finance, the taxes collected from crypto miners this year amounted to only about 46.6 million Kyrgystani soms (about $535,000), which is nearly half of what the government collected last year—around $1.08 million.
The tax collected marks a sharp decline compared to last year’s tax receipts of 93.7 million soms ($1.08 million). Kyrgyzstan government charges a 10% tax on the electricity used by crypto miners, which also includes other taxes like value-added tax and sales tax.
This decreased TX income is a surprise as Kyrgyzstan is known for its abundant renewable energy resources, which makes it an attractive location for crypto mining operations.
The drop in tax revenue started earlier in 2024. In the first half of the year, tax revenue from crypto mining went down by about 30% compared to the same time in 2023. Even with this decline, Kyrgyzstan is still an important place for crypto mining because it has a lot of unused renewable energy, mainly from hydroelectric power.
Kyrgyzstan has a lot of unused hydroelectric power. Over 30% of the country’s energy comes from hydroelectric plants, but only 10% of its potential has been used. This surplus of energy makes it a great place for crypto miners who need a lot of electricity.
In the larger context, despite the dip in mining tax revenue, there are some positive developments in how cryptocurrency is linked to energy systems. In places like Germany, for example, surplus renewable energy is used to power Bitcoin mining operations, which can help stabilize energy grids.
This trend is being explored in other countries as well, where Bitcoin mining is seen as a way to use up excess renewable energy that would otherwise go to waste.
Overall, while Kyrgyzstan’s crypto mining tax revenue has fallen significantly this year, it still benefits from its energy resources, and cryptocurrency remains an important part of the global energy conversation.
