Russia plans to temporarily outlaw cryptocurrency mining in a number of areas, including seized territories in Ukraine, in response to mounting wintertime energy issues. On November 20, the cabinet met under the leadership of Deputy Prime Minister Alexander Novak to discuss the current energy crisis and its connection to cryptocurrency mining.
Ban on Winter Mining to Reduce Energy Stress
In energy-stressed areas like Irkutsk, the Republic of Buryatia, and the Zabaikalsky region in Siberia, Russian officials intend to stop cryptocurrency mining. The limitations will also apply to occupied Ukrainian territory like Donetsk, Luhansk, Zaporizhzhia, and Kherson, as well as the North Caucasus, which includes Chechnya and Dagestan.
The prohibition in Siberia will be seasonal, lasting from December 1, 2024, to March 15, 2025, and then again every year from November 15 to March 15 until 2031. On the other hand, starting in December 2024, mining will be prohibited year-round in areas such as the North Caucasus and seized Ukrainian lands. While Chechnya has already called for such a ban earlier this year, local officials in Siberia and Dagestan have expressed concerns about electricity shortages made worse by cryptocurrency mining.
Enhancing the Laws Governing Crypto Mining
Recent changes to Russia’s crypto-mining legislation have given the government the authority to set particular limitations. By making enterprise miners to register with tax authorities and adhere to stringent energy use limits, these rules distinguish between private and industrial-scale miners. Although they are not required to register, individual miners must meet electricity consumption requirements in order to prevent being reclassified as enterprise miners.
In line with the legislative framework that was established earlier this year, which authorised cross-border transactions utilising digital currencies and legalised cryptocurrency mining, these initiatives seek to reduce energy use.
Similarities to Iran’s Difficulties with Crypto Mining
Russia’s strategy is similar to Iran’s difficulties with cryptocurrency mining, where uncontrolled activities have resulted in acute power outages. In order to solve these problems, Iran temporarily outlawed cryptocurrency mining in 2021, however illicit mining still puts a strain on its electrical system. In contrast to Iran, Russia is making efforts to increase its capacity for energy production, including plans to reactivate a power plant from the Soviet era in order to facilitate lawful mining operations.
Russia’s Place in the World of Bitcoin Mining
Despite these limitations, Russia is still the world’s second-largest Bitcoin mining nation, behind the United States. In spite of regulatory obstacles, its mining industry has prospered. President Vladimir Putin passed legislation earlier this year that permits the usage of cryptocurrencies across international borders and lays the groundwork for controlled mining operations.
The government’s delicate balancing act of addressing domestic energy demands and preserving its position as a worldwide hub for cryptocurrency mining is highlighted by the impending mining curbs.
