Uzbekistan triples electricity tax on crypto mining

Uzbekistan triples electricity tax on crypto mining

On September 27, the government of the Republic of Uzbekistan announced that they will be increasing the electricity taxes for those mining for cryptocurrencies by 300%. In an announcement, the Cabinet of Ministers ordered that these mining operations will see this dramatic increase take effect immediately.

This new tax appears to have come from an August 22, 2019 decree issued by President ShavkatMirziyoyev. To give some idea of what this was all about, the provision was called “On Accelerated Measures to Improve Energy Efficiency of Economic Sectors and the Social Sphere, Implement Energy Saving Technologies and Develop Renewable Energy Sources.” The purpose of this provision was to motivate consumers to use electrical energy in more efficient and intelligent ways.

In September 2018, the president ordered that a new blockchain-based development fund be established. The Digital Trust was created to integrate several government projects, including education, healthcare, and cultural endeavors. Its purpose was to also oversee international investment as the country looks to move into a digital economy.

This came at the same time that Uzbekistan officially authorized the trading of crypto assets. It was made illegal for the first time and was also tax-free. This led many to begin digital mining operations.

However, these mining operations began to take their toll on the electrical grid of the country. This appears to have prompted the Uzbekistan government to take action to try to increase their own revenue while making those who are the biggest consumers of electricity pay for their usage.

Many countries have seen this as a viable way to ensure equality of usage of electricity. Iran had all but shut down crypto mining operations because of excessive use. It was found that some mining firms were using an equivalent amount of energy as that of 24 households. While allowing these firms to operate, they have now imposed higher taxes on crypto mining firms and require a license to operate.

China is another country that has shown a growing concern about the amount of energy consumption these mining operations use. It is reported that as much as 70% of all crypto is mined in China, but at such a significant cost in energy that the government of China is looking to ban crypto mining altogether. The country already announced just two weeks ago that they would be cracking down on mining operations in Inner Mongolia effective immediately.

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