The Russian government has approved a sweeping ban on cryptocurrency mining in ten regions, effective from January 1, 2025. This decision aims to address local electricity shortages and align mining activities with evolving regulations.
Background and Reasons for the Ban
Reported by state-owned media, the ban targets southern regions, including Dagestan, Ingushetia, Kabardino-Balkaria, and North Ossetia, as well as territories such as Donetsk and Lugansk. It prohibits both large-scale mining pools and individual operations. Siberian regions like Irkutsk and Buryatia will face seasonal restrictions during winter energy peaks starting from 2025.
Energy Challenges and Policies
Kremlin officials continue to express caution regarding energy consumption. High-ranking officials have warned of potential energy shortages in the next 5 to 10 years due to the rapid growth of crypto mining. The pressure is most acute in Southern Siberia, where Bitcoin mining thrives due to low electricity costs.
Future Prospects and Taxation Policy
Following the legalization of crypto mining, the Russian Ministry of Finance proposed a 15% tax on mining income, allowing miners to deduct expenses. This bill is currently under consideration in the Russian legislative arenas. The final implementation of the ban may be reconsidered if the energy supply situation improves.
The introduction of a ban on crypto mining in Russia represents an attempt to manage energy resources and regulate the crypto industry. Nevertheless, it also highlights the need for reassessment of energy policies and tax norms related to this activity.
