Kazakhstan is becoming an important destination for Bitcoin (BTC) miners seeking cheap electricity in the post-halving market driven by thinner margins. According to recent reports, the oil-rich Central Asian country expects the total amount of money invested in local crypto mining operations to double by the end of 2020 and attract $738 million over the next three years.
Unlike other countries in Central Asia, the Kazakh government has de facto legalized crypto mining, which makes the market more attractive for both local and foreign players. So, could this vast semidesert land become the new go-to spot for BTC miners?
From blanket crypto ban to legalization
The Kazakh government has adopted an overall friendly approach to crypto recently, although there is still little regulatory clarity on the subject. However, positive developments were preceded by regulatory turbulence, and at some point, its central bank went as far as to suggest a blanket ban on cryptocurrencies.
In early 2018, the chairman of the National Bank of Kazakhstan, Daniyar Akishev, declared that his agency was considering outlawing all cryptocurrencies. Just a few months later, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in crypto regulation but did not mention whether this regulation should encourage the sector’s growth or its containment.
Previously in 2017, Kazakhstan’s government-supported Astana International Finance Center signed a deal with Malta-based firm Exante to develop the Kazakh digital asset market, while the central bank announced it was considering using blockchain to sell short-term debt notes to investors.
Things started to look more concrete and positive for local crypto miners in 2019. In December of last year, local media reported that Kazakhstan’s lawmakers wouldn’t be taxing cryptocurrency mining until the mined assets are exchanged for fiat money, as crypto mining would not be treated as an entrepreneurial activity but rather a “purely technological process.”
A recent bill, which was approved by the Kazakh Senate and signed into law by Nazarbayev earlier in June, essentially legalizes mining, saying that people involved in digital mining are obliged to inform the authorities about their activities. It also stresses that miners are the legal owners of the digital assets they produce.
Didar Bekbauov, founder of crypto mining marketplace Xive — a local company providing hosting services for large-scale international miners — and who previously worked at Hive Blockchain, told Cointelegraph that the current regulation is not strict, but stressed that the framework hasn’t been finalized yet: “The bill says miners need to report to [the] government about their activities. But nobody still knows how it will be in practice. Other than that no regulations.”
Cheap electricity attracts foreign players
According to Bekbauov, the main mining players in Kazakhstan are foreign companies from China, Japan and “other…