Russia to Ban Crypto Mining in 10 Regions for 6 Years

Highlights:

• Russia plans to ban crypto mining in 10 regions until 2031, starting in January.
• Seasonal restrictions in Siberian regions will manage energy demand during winter months.
• Crypto mining regulations require miners to register and report assets to the Federal Tax Service.

Russia has announced a significant decision to regulate cryptocurrency mining. The government plans to ban mining activities in 10 regions until 2031. These restrictions, starting in January next year, aim to balance energy usage and prioritize industrial demands. 

Crypto mining will be prohibited in Russian regions, including Dagestan, Ingushetia, North Ossetia, Chechnya, the Donetsk, Kabardino-Balkaria, Karachay-Cherkessia, and Lugansk People’s Republics, as well as the Zaporizhzhia and Kherson regions. 

Russia will introduce seasonal restrictions in three Siberian regions to manage winter energy demand. These restrictions will apply to parts of the Irkutsk Region, Buryatia, and Zabaikalsky Krai. This measure is in addition to comprehensive crypto mining bans. The seasonal restrictions will first be implemented from January 1 to March 15 next year. In the following years, they will extend from November 15 to March 15.

According to TASS, a total ban on cryptocurrency mining will be imposed in 10 Russian regions for six years starting January 1, 2025. Russian lawmakers also approved seasonal restrictions in major cryptocurrency mining areas to prevent power outages. https://t.co/d2qub4RNxl

— Wu Blockchain (@WuBlockchain) December 24, 2024

Russia’s latest mining restrictions are a revised version of the initial proposal made last month. On November 19, Russia’s Deputy Prime Minister Alexander Novak led a government commission meeting. The discussion focused on the development of the electric power industry. Officials suggested restricting mining in regions with power supply issues to avoid shortages during peak demand seasons.

Crypto Mining Reforms in Russia

The latest decision follows Russia’s move in November last year to legalize cryptocurrency mining. Miners are now required to register with the Federal Tax Service. They must provide detailed information about their assets and wallet addresses. Individual miners are allowed to mine up to 6,000 kWh per month.

The government introduced regulations for maintaining mining-related registers. These registers will share data electronically with state institutions, the Central Bank, and electricity operators. The Russian government also updated its cryptocurrency taxation policy. The government sees crypto as property and miners should pay taxes on their mining income. Additionally, cryptocurrency transactions will be exempt from VAT.

🇷🇺 Russia's Federal Tax Service plans two-stage crypto mining tax:

✅Tax on mined coins in wallets (unrealized gains)
✅Tax on price difference when sold

Industrial miners face new regulations, but VAT exemption offered. #CryptoTax #RussiaMining #BlockchainRegulation pic.twitter.com/zvGWDXdqir

— NeomaVentures (@NeomaVentures) October 16, 2024

This year, Russia became the world’s second-largest cryptocurrency mining hub, following the US. The country consumes 16 billion kilowatt-hours of electricity annually for mining activities. This accounts for approximately 1.5% of its total energy consumption. This creats challenges in regions with harsh climates.

Surge in Crypto Adoption in Russia

Cryptocurrency mining is legal in Russia, but trading these assets remains prohibited. Russia has experienced significant growth in DeFi, driven by large institutional transfers.

Homegrown cryptocurrency services have gained popularity, attracting inflows from domestic and international users. Chainalysis reported stable web traffic to centralized exchanges (CEXs). However, Russian-language platforms without KYC saw a spike in activity last year, which has since stabilized.