Emily Walker
In an effort to manage potential energy shortages during the winter, Russia has decided to restrict cryptocurrency mining in certain areas.
Officials from the government commission responsible for energy management have implemented a seasonal prohibition on mining in several regions of Siberia.
Why the Seasonal Restrictions?
The report indicates that these seasonal mining bans are enforced in Siberia due to these regions’ access to low-cost electricity from nearby hydropower plants, making them popular for mining activities.
As winter puts additional stress on the energy system, authorities have prioritized local energy requirements over industrial-scale mining operations.
The restrictions also impact parts of Ukraine recognized as “annexed” by Russia, where significant damage to the energy infrastructure has resulted in frequent outages since 2022.
Given the challenges in restoring the electrical grid, officials have found it necessary to restrict energy-intensive practices such as cryptocurrency mining.
These actions are part of ongoing regulatory changes in Russia concerning cryptocurrency following President Vladimir Putin’s approval of a law enabling the experimental use of cryptocurrencies for international payments and currency exchanges in July.
Particularly impacted are the dense mining areas near Lake Baikal, which are favored for their low energy costs. Hydropower in these regions has historically offered economical electricity, attracting both local and international miners.
However, the increased demand has strained local energy resources, especially in winter when heating and essential services drive energy needs higher.
Before the finalization of this seasonal ban, Russia’s state news agency TASS had already indicated that restrictions would soon be imposed in certain areas. Yevgeny Grabchak, Deputy Head of the Ministry of Energy, stated:
If we say that mining is a precursor to digitalization, then very soon, mining will be banned at the state level in certain regions.
Moreover, the Ministry of Energy estimates that cryptocurrency mining consumes about 16 billion kilowatt-hours per year, making up around 1.5% of Russia’s overall electricity consumption.
Ongoing Regulatory Shifts in Russia
The timing of these developments coincides with a recent introduction of a 15% tax on all cryptocurrency mining and trading activities.
On November 18, the government announced its endorsement of draft changes to legislation governing the taxation of income and expenses linked to digital asset mining and trading. The Finance Ministry explained this decision, stating:
After discussions with businesses, we determined that taxing the financial outcomes of mining is the most equitable way to reflect the results of these activities. This approach aims to balance business interests with state needs.
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