The Central Asian nation has received over $31 million in tax revenues from crypto miners.
Unlicensed mining operations continue to cause Kazakhstan financial losses, despite efforts to bring the whole industry out of the shadows.
According to the latest estimate, damages incurred by the state in the past couple of years amount to well over a billion Kazakhstani tenge, although the government has managed to recover some of the money in the form of seized digital assets.
Illegal crypto mining facilities are responsible for the loss of around 1.3 billion tenge (over $2.3 million) in state revenue since the beginning of 2024, financial authorities in Kazakhstan have calculated.
Investigators opened 17 criminal cases during the same period, the country’s Financial Monitoring Agency (AFM) announced on Thursday.
Most of the illegal Bitcoin farms have been found in and around the capital Astana (5), the city of Shymkent in Southern Kazakhstan and in Kostanay in the North (3 each), the agency detailed.
“As part of these cases, $642,000 in digital assets were seized and confiscated,” the AFM pointed out in a press release, also highlighting:
“It should be noted that some illegal mining farms operated by stealing electricity, in a volume comparable to the consumption of a large city. There have also been cases of violations of the rights of residents living near noisy farms.”
The watchdog emphasized that the illegal electricity usage for coin minting has deprived other businesses and industrial projects, development initiatives and social infrastructure of needed energy resources.
The crypto mining boom in Kazakhstan, which followed China’s decision to ban the activity a few years ago, initially resulted in significant power deficits across the Central Asian nation.
The government addressed the issue through regulation and pricing, largely solving the problem, at least as far as licensed cryptocurrency miners are concerned.
However, unregistered mining operations, often running on illegally sourced electrical energy, have remained a major challenge for the authorities.
Aside from that, Kazakhstan has largely benefitted from the influx of miners, after adopting rules for the growing industry, including for the sale of the minted digital currency on domestic authorized exchanges and the taxation of its profits by the state.
In a post on its Telegram channel, the AFM admitted that crypto mining has generated more than 17 billion tenge (over $31 million) in budget receipts for the country, quoting data from the State Revenue Committee.
The agency also reminded that mining enterprises are allowed to operate in Kazakhstan only after obtaining the respective licenses. It further emphasized:
“Legal mining activity requires equipment verification, an energy supply contract, and tax compliance.”
The AFM also stressed that the opposite “entails criminal liability, harms the country’s economic security, and leads to power outages.”
The regulatory body urged entrepreneurs and Kazakhstani citizens to refrain from participating in illegal mining and to support the development of a transparent digital assets market in the country.
Kazakhstan aspires to become a regional cryptocurrency hub. The nation was recently visited by crypto exchange Binance’s founder Changpeng Zhao (CZ) and the owner of the popular Telegram messenger, Pavel Durov. Both met with President Kassym-Jomart Tokayev and attended a major tech forum.
The Financial Monitoring Agency has been active on other fronts as well. Earlier this week, it announced the dismantling of arguably the largest crypto laundering service in the post-Soviet space, a platform known as the RAKS exchange.
Last month, Kazakhstan busted a large crypto Ponzi scheme, seizing $10 million in digital assets collected from defrauded investors in Central Asia and parts of Eastern Europe, as reported by Cryptopolitan.
