Five years ago, Kazakhstan became one of the world’s largest centers for cryptocurrency mining. This boom overloaded the national power grid, and the government’s response led to most miners either leaving the country or going underground.
Now, the Kazakhstani government is trying to bring this business back to the country by offering tax incentives and legal certainty.
The authorities are offering private investors a three-year tax exemption on individual income from transactions involving digital assets, provided that these assets are not linked to fraud, money laundering, or unlicensed crypto services.
The Cryptocurrency Boom That Crashed Before It Took Off
After China banned Bitcoin mining in 2021, many miners began searching for new locations with cheap electricity. Kazakhstan became the world’s second-largest Bitcoin mining hub after the United States.
However, the influx of miners put a strain on the energy infrastructure. In October 2021, three power plants in northeastern Kazakhstan were shut down in an emergency, and rolling blackouts affected several regions. At its peak, miners were estimated to consume up to 8% of the country’s total electricity generation.
In response, authorities tightened regulations on electricity consumption and digital assets, leading to an exodus of miners abroad and a rise in illegal operations.
However, Kazakhstan has not yet imposed a direct ban on mining, leaving open the possibility of tapping into its potential in the future.
According to data from the financial regulator—the Astana International Financial Center (AIFC)—Kazakh citizens own approximately 1 million crypto wallets.
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