Kyrgyzstan Sees Decline In Cryptocurrency Mining Tax Revenue

According to Cointelegraph, Kyrgyzstan's economy experienced a notable decrease in revenue from cryptocurrency mining taxes, despite the rising valuations of cryptocurrencies in 2024. The country's Ministry of Economy and Finance reported that the mining tax contributed over 46.6 million Kyrgystani soms, equivalent to approximately $535,000, to the national economy this year. This figure represents a significant drop of more than 50% compared to the previous year's collection of 93.7 million soms, which was just over $1 million. Kyrgyzstan imposes a 10% tax on the electricity fees used by cryptocurrency miners, which includes value-added tax and sales tax. The nation is considered an attractive location for crypto mining operations due to its abundant renewable energy resources, which remain largely untapped. Currently, over 30% of Kyrgyzstan's energy supply is derived from hydroelectric power plants, yet only 10% of the country's hydropower potential has been developed, as noted by the International Energy Agency. In related developments, Bitcoin mining is being explored as a means to stabilize renewable energy grids. This approach is gaining traction as renewable energy sources often produce excess electricity that cannot be stored. Deutsche Telekom has initiated a pilot project in Backnang, Germany, utilizing surplus renewable energy for Bitcoin mining. The project, managed by Metis Solutions, is set up on the premises of Riva, a manufacturer of metal and glass facades. The initiative aims to address the challenges posed by the increasing supply of energy from unpredictable sources like wind turbines, which require additional infrastructure to maintain grid stability. Oliver Nyderle, head of digital trust and Web3 infrastructure at Deutsche Telekom MMS, highlighted the potential of Bitcoin mining to regulate energy fluctuations in the electrical grid. He described the process as converting surplus energy into digital values, referring to it as "digital monetary photosynthesis." Beyond economic benefits, Bitcoin mining is also being utilized for innovative applications, such as heating an entire town in Finland with recycled heat from mining rigs, demonstrating its diverse use cases.