Government Raids Illegal Bitcoin Mining-Farm in Kyrgyzstan

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In Brief
  • Kyrgyz financial police have raided an illegal bitcoin mining farm

  • The government, so far, has generally been pro-crypto

  • Raids in the past year underline the murkiness of some local laws

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Financial police in Kyrgyzstan have discovered and shut down an illegal bitcoin mining farm. A cell phone video of the raid was released by government officials.

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On August 6, the Kyrgyz Republic State Financial Crime Office discovered a bitcoin mining farm in an abandoned airplane hangar in Bishkek. A search warrant allowed the financial police to search the hangar. Inside, they discovered a substantial amount of mining hardware.

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While cryptocurrencies are not explicitly illegal in the republic, the technology faces a number of regulatory obstacles, especially when it comes to mining.

Murky Laws

At present, a number of high officials in the Bishkek city government have become involved in the case. National officials whose departments handle bitcoin mining issues also joined the fray.

Authorities are trying to establish how the criminals acquired the mining equipment. They are also investigating exactly how the miners got their electricity, according to the Financial Police press office.

The laws regulating the import of mining equipment remains somewhat unclear, however, a new 15% tax will reportedly soon be introduced. Issues surrounding electricity use as well as tax evasion related to the business also remain murky, news service News-Asia reported.

A Friend to Bitcoin

Kyrgyzstan government officials have generally been friendly to cryptocurrency in official news outlets. According to Russian state-sponsored news site Sputnik, on January 17, 2018, the head of Kyrgyzstan’s National Bank, Tolkunbek Abdygulov, stated:

We are not planning to inhibit [cryptocurrencies] because this is very difficult, so Kyrgyz citizens who put money into cryptocurrency are doing so at their own risk.

In 2017, regulators also warned against the use of cryptocurrencies. They reminded the public that the Som remained the only legal currency in the country. Nonetheless, they stated they would not introduce any restrictive measures regarding crypto into law, reported Rossiyaskaya Gazeta.

Raid, Raid, Go Away

Additionally, Kyrgyzstan is experiencing an uptick in black market mining farm raids. The farms officially register as privates entities and then claim to conduct different kinds of business. However, the amount of electricity these businesses required ended up being enormous.

So large, in fact, that the government has since deemed it illegal. These farms each used as much electricity as an entire neighborhood of the country’s capital Bishkek. Officially, the government has charged miners for violating a number of laws in Kyrgyzstan’s criminal code.

The value of the cryptocurrency mined has not been released. News-Asia speculates that authorities have not yet counted it.

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Harry Leeds is a writer, editor, and journalist who spent much time in the former USSR covering food, cryptocurrencies, and healthcare. He also translates poetry and edits the literary magazine mumbermag.me.

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