
Cryptocurrency miners in Russia will face restrictions in several regions as the government has decided to ban mining activities in 10 regions.
According to a December 24 report from state-owned news agency tassThe Russian Cabinet approved the ban, which will affect the regions of Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, Chechnya, Donetsk and Lugansk People’s Republics, Zaporizhia, and Kherson.
Starting January 1, 2025, and effective until March 15, 2031, crypto miners in these regions will be prohibited from conducting cryptocurrency mining operations, participating in mining pools, and engaging in any related activities.
Additionally, some regions such as Irkutsk, Buryatia and Zabaikalsky will face seasonal restrictions on mining activities when electricity consumption peaks.
Specifically, the restrictions will initially apply from January 1 to March 15 and will be extended to cover the period from November 15 to March 15 in subsequent years.
However, the report said the list is not final and can be adjusted as the government deems appropriate.
Initially, regulators were considering a complete ban in 13 regions, including crypto mining hotspots like Irkutsk.
With the move, Russia plans to ease the strain on regional power grids, address power shortages and tackle economic imbalances caused by cross-subsidies.
Cross-subsidy occurs when lower electricity tariffs in energy-intensive regions, often benefiting crypto miners, are offset by higher costs paid by consumers and industries in other regions.
This creates an unequal financial burden, with the central and industrial sectors effectively subsidizing the subsidized electricity consumed by mining operations.
Sergei Kolobanov, deputy head of the Central Strategic Research Department of the Fuel and Energy Complex Economy, told TASS that the timing of the sanctions is in line with the government’s plan to phase out these subsidies.
According to him, once the power market is liberalized and adequate energy capacity is ensured, the restrictions can possibly be lifted.
Regulating the Russian crypto mining sector
The ban comes as part of a new law signed by President Vladimir Putin on November 1 that allows the government to restrict mining activity in certain areas while imposing protocols to enforce these measures.
Russia had already started cracking down on unauthorized crypto-mining activities even before the latest rules came into effect.
As previously reported by Invez, in October, the Ministry of Internal Affairs conducted raids on locals using subsidized electricity to illegally mine cryptocurrencies.
Meanwhile, Russia has also started taxing cryptocurrencies earned from mining as income in kind.
Putin signed the law on 29 November, and mining income is taxed under a progressive scale, with a rate of 13% for income up to 2.4 million rubles and 15% for income above this limit.
On the other hand, corporate profits from cryptocurrency mining are subject to a higher rate of 25%. However, mining-related expenses are eligible for tax deduction.
Post Russia implements six-year ban on crypto mining in 10 regions: Here’s why first appeared on Invez