As a seasoned crypto investor with roots deep in the Siberian tundra and a keen eye for geopolitical trends, I find Russia’s latest moves in the crypto sphere intriguing yet predictable. Being no stranger to the frigid winters of Irkutsk and Buryatia, I can attest that the energy-stressed zones are better off without the added burden of mining rigs during those harsh months.
Alexander Novak, the Deputy Prime Minister of Russia, convened a gathering with top-ranking officials for the purpose of prohibiting cryptocurrency mining within Russian-controlled regions of Ukraine, aiming to preserve electricity resources.
In response to potential power outages during winter, Russian authorities plan to prohibit cryptocurrency mining in specific regions, including occupied territories like Donetsk, Luhansk, Zaporizhzhia, and Carson within Ukraine. Additionally, regions such as Siberia and the North Caucasus will also be subject to this ban.
From December 2024, Russia’s Energy Ministry is set to enforce restrictions on Bitcoin mining operations in regions experiencing energy shortages such as Irkutsk, Chechnya, and DPR.
— Mario Nawfal’s Roundtable (@RoundtableSpace) November 17, 2024
Seasonal restrictions on mining activities in regions like Irkutsk, Buryatia, and Zabaikalsky, Russia, will commence from December 1, 2024, and last until March 15, 2025. These restrictions will be annual, taking place from November 15 to March 15 every year, until 2031. Conversely, in the North Caucasus and occupied territories, crypto mining will cease completely from December 2024 until March 2031, with no seasonal exceptions.
Following President Vladimir Putin’s signing of new cryptocurrency regulations on November 1st this year, these laws allow for crypto mining under close regulatory supervision, establish experimental systems for cross-border cryptocurrency transactions, and prohibit domestic transactions to maintain economic stability. Given that Russia is the second largest mining hub globally, after the United States, it consumes roughly 16 billion kilowatt-hours of electricity annually for mining activities, equivalent to about 1.5% of its total energy consumption, with this figure having tripled in 2023 as per Statista data.
Alongside limiting mining operations, Russia has also revised its tax laws related to cryptocurrency. From this point forward, the earnings from mining activities will be taxed based on their market worth at the time they are received, while operational costs can be deducted. Notably, transactions involving cryptocurrencies themselves will not incur value-added tax, but any profits made will fall under a securities tax system with a maximum personal income tax rate of 15%.
Additionally, Russia intends to set up a national cryptocurrency exchange in Moscow and St. Petersburg, showing a two-pronged strategy for regulating digital assets while tackling energy issues. The prohibition on mining in Russian-controlled Ukrainian territories implies that Russia is aiming to bolster its grip over local resources, further intensifying the already fragile geopolitical strife.
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2024-11-20 10:02