Vladimir Putin Backs New Crypto Mining Limits

From 2024 to 2031, Russia will implement energy caps, impose taxation on regulated operations, and impose crypto mining restrictions in 13 regions.

Russian President Vladimir Putin has approved new measures to restrict cryptocurrency mining in multiple regions to address energy supply concerns. These restrictions are a component of Russia’s broader initiatives to regulate the industry and conserve electricity during the peak winter months.

Crypto mining restrictions have been implemented in thirteen regions of Russia

Between December 2024 and March 2031, Russia will implement crypto mining restrictions in 13 regions, including the occupied territories of Ukraine. The affected regions are the Irkutsk region, the Zabaikalsky Krai, and certain areas of the Republic of Buryatia in Siberia.

In addition, the Republic of Dagestan, the Republic of Ingushetia, North Ossetia-Alania, Chechnya, Kabardino-Balkaria, and Karachay-Cherkessia regions will maintain annual emission standards during the heating season from 2012 to 2031.

The measures will also impact the occupied territories of Donetsk and Luhansk, Zaporizhzhia, and Kherson regions, as indicated by the local report. During a government commission meeting by Deputy Prime Minister Alexander Novak, such measures were considered. The conference addressed the topic of energy conservation, as the country is expected to experience an increase in power consumption during the winter season.

Energy Limits for Individual Miners

The government has established a maximum power usage of 6,000 kWh per month for unregistered miners of cryptocurrencies to regulate energy consumption further. Individuals surpassing this threshold will be compelled to acquire an entrepreneur’s license to continue mining cryptocurrency legally. The power infrastructure would be further strained, as the government claimed this would help guard against unregistered miners. Mining activities will be permissible; however, they must comply with taxation and reporting regulations.

As a result, the crypto mining sector in Russia, particularly in regions like Irkutsk, may be significantly affected by the new measures. The Irkutsk region is renowned for its cold climate, powerful hydropower resources, and relatively low electricity tariffs, which attract mining activities. Located in Bratsk, near one of the world’s largest hydroelectric power stations, this facility is the site of BitRiver’s largest data center, launched in 2019.

Consequently, these circumstances have rendered the Siberian regions suitable for mining companies. However, the government’s energy supply restrictions will result in a reduction in operations in these regions, which will result in a decrease in the output of crypto mining.

Despite Russia’s implementation of crypto mining restrictions, the United States has the potential to become a crypto hub under Donald Trump’s leadership, as evidenced by his commitment to the Strategic Bitcoin Reserve. It is intriguing that Bitcoin advocate Anthony Pompliano recently recommended that the United States print $250 billion for the strategic reserve.

Mining Activities Subjected to Crypto Taxation

Russia has implemented tax regulations for cryptocurrency transactions and mining operations in addition to mining restrictions. Cryptocurrencies will be classified as property for tax purposes under the new laws. The market value at the time of receipt will be used to determine the tax rate on income from mining and trading.

Miners will be permitted to deduct operational expenses from their taxable income, and crypto transactions will continue to be exempt from value-added tax. Operators of mining infrastructure will be obligated to submit routine reports on the miners they serve to guarantee compliance with tax regulations.

According to the Ministry of Finance, these measures aim to strike a balance between the interests of the state and those of businesses. The measures indicate Russia’s increasing endeavors to regulate the crypto sector and manage its energy requirements effectively.