Russian authorities plan to ban cryptocurrency mining in occupied Ukrainian territories, marking a new regulatory step as the conflict surpasses 1,000 days.
Russian Deputy Prime Minister Alexander Novak convened a meeting with senior officials to address the country’s strained power supply during the peak autumn and winter seasons. The focus included energy challenges posed by cryptocurrency mining, especially in regions with limited power capacity.
Russia’s Cryptocurrency Mining Restrictions Could Last Until 2031
According to a report from the Moscow Times, the proposed ban would cover territories under Russian control, including Donetsk, Lugansk, Zaporizhia, and Kherson. The government aims to restrict mining activities in these areas, citing the impact on local power grids.
In the North Caucasus and the occupied regions of Ukraine, a complete ban on mining will come into effect starting in December 2024.
Additionally, cryptocurrency mining in Siberia will be suspended from December 1 to March 15, 2025. Similar restrictions will apply annually from November 15 to March 15 until 2031.
“Starting in December 2024, the Russian Ministry of Energy is tightening its grip on mining rigs in energy-stressed regions like Irkutsk, Chechnya, and the DPR. The takeaway is clear: energy ≠ infinite and miners may need to go underground or pivot,” Maria Nawfal wrote on X (formerly Twitter).
Putin’s government has been considering several changes to Russia’s cryptocurrency regulations over the past few months. The new law allows for direct regulation of mining pools, while support for using cryptocurrencies as a payment method remains strong.
Russia's average monthly hashrate share in global Bitcoin mining. Source: World Population Review
Last week, the government revised its cryptocurrency tax policy. Under the new rules, cryptocurrencies are classified as assets for tax purposes. Income from mining will be taxed based on its market value at the time of receipt.
However, miners will also be able to deduct the costs incurred during their operations, easing some of the financial pressure on the industry. Cryptocurrency transactions will be exempt from value-added tax (VAT).
Instead, the income would be taxed under the same framework as securities, which would cap personal income tax on crypto-related income at 15%.
Additionally, reports indicate that Russia is moving forward with plans to establish national cryptocurrency exchanges, which will likely be based in St Petersburg and Moscow.