Mining Income in Kyrgyzstan Plunges by Half
In the heart of Central Asia, Kyrgyzstan has emerged as a significant player in the global cryptocurrency mining scene. The country's abundant hydroelectric resources, low electricity costs, and favourable regulatory environment have attracted a wave of cryptocurrency miners, transforming the local economy.
The government's decision to authorize the placement of a mining farm at a hydroelectric plant capable of generating 120 MW of electricity in June 2023 was a turning point. This move, coupled with increased electricity tariffs for cryptocurrency mining operations approved in 2021, has set the stage for large-scale mining investments.
Cryptocurrency mining in Kyrgyzstan is now legal and regulated, with a tax framework primarily based on electricity consumption. Miners pay a flat 10% power tax rate, offering predictability and encouraging large-scale investments. In 2023, the tax contribution from cryptocurrency mining was 93.7 million soms, and in 2024, it declined to over 46.6 million soms, despite a significant drop compared to the previous year.
The country's hydroelectric power plants, which account for over 30% of Kyrgyzstan's total electricity supply, are a strategic resource for mining farms. The government leverages this cheap electricity resource while imposing the electricity-based tax, which miners must consider in their cost structure.
The boom in cryptocurrency mining has created jobs and boosted local economies. For instance, one major mining farm employs over 200 locals. The Kyrgyz government supports the digital asset ecosystem by licensing a large number of Virtual Asset Service Providers (126 VASPs licensed by October 2024) and developing a digital som Central Bank Digital Currency (CBDC).
Moreover, the government fosters regional and international cooperation on crypto regulation, as seen with strengthened ties with Pakistan in blockchain and virtual asset regulation. This collaborative approach positions Kyrgyzstan as a hub for cryptocurrency innovation and regulation in the region.
In conclusion, Kyrgyzstan in 2025 offers a cryptocurrency mining environment characterized by legality, clear regulatory oversight, electricity-based taxation, low-cost power, and active government support and international collaboration in the cryptocurrency sector. The country's hydroelectric power plants, which have the potential to generate a significant amount of electricity, provide a solid foundation for this burgeoning industry.
[1] Kakar, A. (2023). Kyrgyzstan's Crypto Mining Boom: Low Costs, Hydroelectric Power, and Favorable Regulations. The Block. [2] Kakar, A. (2024). Kyrgyzstan's Crypto Mining Sector: A Year in Review. The Block. [3] Kyrgyz Republic. (2024). National Bank of the Kyrgyz Republic. Retrieved from https://nationalbank.kg/ [4] Government of Pakistan. (2024). Pakistan-Kyrgyzstan Cooperation in Blockchain and Virtual Asset Regulation. Retrieved from https://www.pakistanembassy.kg/
- Given the growth of cryptocurrency mining in Kyrgyzstan, the country's hydroelectric power plants serve as a strategic resource for attracting finance and technology investments in the industry.
- With the government's supportive regulations, favorable tax framework, and emphasis on international cooperation, Kyrgyzstan positions itself as a hub for large-scale finance, technology, and cryptocurrency innovation in Central Asia.
