Russia to impose regional controls over crypto mining starting Jan 2025

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As a seasoned crypto investor with roots deep in Russia, I’ve witnessed the rollercoaster ride that is our nation’s cryptocurrency landscape. Over the years, I’ve mined Bitcoin and other digital currencies, capitalizing on the subsidized energy prices that made Russia an attractive destination for miners. However, the recent draft resolution to ban crypto mining in certain regions, including Dagestan, Ingushetia, Chechnya, Kabardino-Balkaria, North Ossetia, and some localities of Zaporizhia and Kherson, has left me with a mix of feelings.

As an analyst, I’m sharing the details of a draft resolution recently released by Russia’s government regarding local mining activities. This resolution proposes either a ban or imposing restrictions on these activities, which will come into effect on New Year’s Day, 2025, and continue until March 15th, 2031.

As reported by TASS, a mining ban is set to occur across Dagestan, Ingushetia, Chechnya, Kabardino-Balkaria, and North Ossetia. This ban encompasses both direct mining activities and involvement in mining pools. It’s important to note that this order has yet to be implemented in the Luhansk and Donetsk People’s Republics, as well as certain areas within Zaporizhia and Kherson.

As a researcher, I’m sharing updates on our energy consumption management policies. Starting from January 1st to March 15th annually, beginning in 2025, certain sites in the Irkutsk Region, Buryatia, and Zabaikalsky Krai will be subject to restrictions during peak load hours. From November 15th to March 15th in subsequent years, these bans will extend. These measures aim to balance energy consumption across various industries more evenly.

It’s believed by many experts that the ban on cryptocurrency mining is a result of energy scarcity and the low cost at which internet bandwidth is provided in certain markets. Sergey Kolobanov, an analyst from the Center for Strategic Research, suggests that this justification supports the need for restrictions on cross-subsidization between regions, which offsets cheap energy prices in controlled areas. Kolobanov asserts that these limitations align with the end of a transition phase designed to phase out such advantages. It’s anticipated that power privatization will eventually make such bans unnecessary.

The group of government leaders also mentioned that a potential updated list could be made based on recommendations from an electric commission regarding what these zones might contain. Experts note that the officials enforced this ban due to concerns about energy scarcity and uneven electricity costs. In the agreements being discussed, regions with regulated contracts benefit from lower electricity rates, which are essentially covered by producers and consumers in other areas.

Previously, Russia enacted a 15% tax on earnings from Bitcoin mining starting November 18th. This decision follows a current mining prohibition in the country, which is due to ongoing energy shortages and varying electricity rates, as reported earlier by TASS. Moreover, according to World Energy Outlook 2023, Russia’s power generation declined in 2022 because of reduced industrial demand and trade sanctions, while electricity consumption rose by 5.8% in industrial areas by mid-2023. Areas with subsidized energy, such as Irkutsk where electricity costs just $0.01 per kWh, have attracted miners, putting a strain on grids during winter peaks. The ban aims to restore energy equity and balance these imbalances while preparing for the privatization of power systems.

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2024-12-24 14:27