China has been making headlines over its tough laws against cryptocurrency trading and mining. Earlier this year, the country banned crypto mining, which has pushed Chinese miners towards the Kyrgyz Republic.
The Kyrgyz Republic is a leading hotspot for crypto mining pools. However, its government has now issued a notice stating that the prices of electricity used by crypto miners will be increased.
New Tariff to Run for Four Years
The notice issued on September 30 stated that “Taking into account the energy intensity of such enterprises and the need for uninterrupted supply of electric energy… the tariff for electric energy will be adjusted by an increasing coefficient of 2.0.”
The Kyrgyz Republic has stated that the medium-term tariff will be for the period between 2021 and 2025. The notice further specified that the tariff will be “made up of the tariff for the previous year, adjusted for the inflation rate for the previous year.”
It further noted that the payments made by consumers who were engaging in cryptocurrency mining would be noted down in a separate filing. Cryptocurrency mining companies have now been included in the same category as gold mining and alcohol manufacturing firms.
Moreover, the prices paid by these miners will include a tariff depending on the cost of generating the electricity and the cost of transmitting this electricity to the miners. For the 2021 period, the republic has placed the new tariff of 12.5%, equivalent to around $0.03 unit per hour.
Mining Attributed to Energy Crisis
However, the increased mining activities in Kyrgyzstan have also attracted criticism from those who now believe that crypto mining is behind the energy crisis in Kyrgyzstan. One of the major critics of crypto mining is the former Head of the Agency for the Promotion and Protection of Investments.
A recent report from the World Bank stated that the number of people who have access to electricity in the country had drastically dropped in 2019 compared to 2017 and 2018. However, the World Bank did not reveal the reasons for this decline.
On the other hand, Kyrgyzstan has been making an effort to regulate the cryptocurrency sector. Last year, a crypto draft bill was introduced, allowing the National Bank of the Kyrgyz Republic to introduce licensing requirements for cryptocurrency brokerage firms.
In August, cryptocurrency exchanges operating in the country were subjected to additional policies regarding functions, rights and status by the State Service for Regulation and Supervision of Financial Markets.
Looking to buy or trade Crypto now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider
- How to buy bitcoin
- How to buy cryptocurrency