Taxes from block reward miners in Kyrgyzstan dipped by over 50% year-on-year in 2024 as the BTC halving took its toll on the sector.
Kyrgyzstan emerged as one of the destinations for miners fleeing China following an intense crackdown by Xi Jinping’s government. In 2023, the country collected 93.7 million som ($1.03 million) in taxes from BTC miners.
However, in 2024, the taxes dipped to $535,000, as revealed in a budget document from the Ministry of Economy and Finance. Local media report that the drop was evident in the first half of 2024; by August, the Kyrgyz government had collected 30% less taxes than in a similar period in 2023.
In Kyrgyzstan, miners pay a 10% tax on the electricity fee they consume. They also remit sales and value-added taxes (VAT). The country has one of the friendlier tax regimes for the sector, and combined with the cheap hydroelectric power, it has emerged as a viable alternative to other Asian nations for global miners.
However, its neighbor to the north, Kazakhstan, has been the regional leader. At some point in 2021, when China purged miners from the country, Kazakhstan was the second-largest BTC mining nation, with up to 7% of the country’s energy flowing into the sector. Kazakhstan’s mining sector had also plunged since the 2021 highs when the grid operator started cutting several miners off as they strained the grid.
Back in Kyrgyzstan, the dip in revenue and taxes was no surprise. Globally, 2024 was a rocky year for BTC miners despite the broader bull market as the halving took its toll. By August, miners had hit their lowest daily revenue for the year, with a JP Morgan (NASDAQ: JPM) report revealing that BTC mining profits and revenue had recorded consecutive dips in the four months to November 2024.
Some miners merged or sold their operations to bigger rivals to survive. Others, like Core Scientific (NASDAQ: CORZ), Hut 8 (NASDAQ: HUT), and Bit Digital (NASDAQ: BTBT), have been trading BTC mining for the more profitable AI data centers. The latest is Hive Digital—the Canadian firm that recently shifted operations to Texas—which invested $30 million to support AI infrastructure.
BTC miners’ light at the end of a dark 2024 tunnel is Donald Trump’s election. The Republican leader has pledged to have ‘all BTC mined in the US,’ alongside other pledges like a national BTC reserve.
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