Kyrgyzstan is considered a hotbed for cryptocurrency miners because it has yet to use renewable energy sources.
While cryptocurrency values have increased in 2024, crypto mining taxes have been reduced for Kyrgyzstan’s economy.
Cryptocurrency mining taxes contributed more than 46.6 million Kyrgyzstani soms ($535,000) to the country’s economy this year, according to a budget document released by Kyrgyzstan’s Ministry of Economy and Finance on December 25.
According to local media reports, this represents a reduction of more than 50% from the cryptocurrency mining tax introduced in 2023, which was 93.7 million soms, or more than $1 million. The cryptocurrency mining tax rate in Kyrgyzstan is 10% of the cost of electricity used by cryptocurrency miners in the country, including VAT and sales tax.
The country is considered ideal for cryptocurrency mining due to its vast renewable energy resources, many of which are underutilized.
According to a report by the International Energy Agency, more than 30% of Kyrgyzstan’s total electricity generation comes from hydroelectricity, but the country’s hydroelectricity capacity is only 10%.
Cointelegraph has reached out to the Ministry of Economy and Finance of Kyrgyzstan for comment.
Bitcoin mining could help secure future renewable energy grids
Bitcoin mining could help secure future energy grids, as renewable energy sources often produce electricity intermittently and cannot be stored. Deutsche Telekom will use the remaining energy from renewable energy sources to power its Bitcoin mining operations.
The company announced on November 11 that Bitcoin mining equipment will be installed at the Riva factory and the glass-blocking factory in Backnang, Germany, which will be operated by Metis Solutions.
Deutsche Telekom’s pilot project is based on the increasing number of renewable energy sources that are not being wasted.
Oliver Nyderle, head of digital trust and Web3 infrastructure at Deutsche Telekom MMS, said that the country’s increasing energy supply will come from intermittent sources such as wind turbines and that more infrastructure will be needed to monitor the power grid. Needle wrote in his post that Bitcoin mining could be used to manage power fluctuations in the national electricity grid:
“We took this opportunity with Bankhaus Metzler and RIVA Engineering GmbH to test the impact of Bitcoin miner regulation on electricity production. The remaining energy is converted into digital value by miners. We call it digital currency photosynthesis.”
The use cases for Bitcoin mining go beyond the financial benefits for miners. In Finland, a Bitcoin mine uses the heat generated by mining equipment to heat a city of over 11,000 inhabitants.
