By Nermeen Nabil Khear 
Russia has announced sweeping measures to ban crypto mining in select regions, including occupied territories in Ukraine and several energy-stressed areas of Siberia and the North Caucasus.
The bans, which will commence in December 2024, aim to conserve electricity during winter and stabilize the energy supply in regions with heightened demand.
This move is a result of the new crypto regulations signed by President Vladimir Putin earlier this month.
Russia to Ban Crypto Mining: Is the Country Going Back on Their Initial Stance?
Deputy Prime Minister Alexander Novak led a government commission that approved the measures, which target regions with significant strain on energy resources.
These include Irkutsk, Buryatia, Zabaikalsky in Siberia, and six republics in the North Caucasus, such as Chechnya and Dagestan.
Additionally, complete mining bans will apply to the occupied Ukrainian territories of Donetsk, Luhansk, Zaporizhzhia, and Kherson, areas where much of the energy infrastructure has been severely damaged since the onset of the war in 2022.
The seasonal restrictions in Siberia will be effective from December 1 to March 15 each year and continue until 2031.
In contrast, the bans in the North Caucasus and occupied territories will last from December 2024 to March 2031 without seasonal exceptions.
These measures are part of Russia’s broader strategy to mitigate the risk of power outages and ensure energy availability for critical infrastructure and residents during the harsh winter months.
Energy conservation was a key driver behind the bans. According to official estimates, crypto mining in Russia consumes approximately 16 billion kilowatt-hours annually, representing about 1.5% of the nation’s total electricity usage.
Mining activities have surged in regions like Siberia, where electricity costs are low due to abundant hydropower, further straining local grids.
Implications for Russia’s Crypto Strategy and Global Mining Landscape
President Putin signed legislation on August 9, which will take effect on November 1. The legislation legalizes crypto mining under strict regulatory oversight and introduces experimental frameworks for cross-border crypto payments.
While domestic transactions in digital assets remain prohibited, the laws have sparked debate among lawmakers, with some viewing them as a potential tool for circumventing international sanctions.
Russia’s position as the world’s second-largest crypto mining hub after the United States shows the global significance of these measures.
The country’s mining industry has been pivotal in sustaining the Bitcoin network, contributing substantial hash power.
However, the new restrictions could prompt miners to seek alternatives, such as relocating operations to less-regulated regions or adopting stealth mining practices to avoid detection.
Russia’s ban on mining in these areas could be interpreted as an acknowledgment of the limited energy resources available, redirecting power to support local needs.
However, critics may view the move as a geopolitical strategy to consolidate control over the annexed territories.
Notably, Russia is also advancing its regulatory framework for cryptocurrency with a draft amendment from the Ministry of Finance proposing a 15% tax on crypto earnings.
This initiative aims to formalize the taxation of cryptocurrency mining and transactions, classifying crypto as property for tax purposes and replacing VAT with income-based taxation similar to securities.
Miners will be taxed on the market value of mined tokens, and operational expenses will be deductible. Mining infrastructure operators will also need to report user activity to tax authorities.
Additionally, the Federal Tax Service (FNS) has suggested taxing unrealized gains from mining, which has sparked many discussions.
The post Russia Moves to Ban Crypto Mining in Occupied Ukrainian Territories appeared first on Cryptonews.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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