Russia proposes to restrict cryptocurrency mining in 13 regions, including Irkutsk and occupied territories in Ukraine, until 2031 to ensure energy supply.
The Russian government is considering imposing restrictions on cryptocurrency mining activities in 13 regions across the country to address concerns about energy security, particularly during peak electricity consumption from autumn to winter. This move follows Russia's official passing of laws regulating the cryptocurrency industry in August and October 2024, marking a significant turning point in the country's approach to the rapidly evolving technology sector.
The government committee meeting on the development of the electricity sector chaired by Deputy Prime Minister Alexander Novak on November 19 highlighted concerns about the potential electricity shortage. Officials have proposed restricting cryptocurrency mining, an energy-intensive activity, in areas vulnerable to power shortages.
The list of affected areas includes Irkutsk, an important cryptocurrency mining center, along with occupied territories in Ukraine, including Donetsk, Luhansk, Zaporizhzhia, and Kherson. Other areas in Siberia such as part of the Republic of Buryatia and Zabaikalsky Krai are also on this list.
Impact on the mining industry
The restrictions, if approved, will be in effect seasonally from autumn to winter each year until 2031. The decision could have significant consequences for Russia's cryptocurrency mining industry, particularly for companies like BitRiver, which has invested heavily in infrastructure in regions like Irkutsk. According to local sources, the city of Bratsk, in Irkutsk, is home to BitRiver's first and largest data center, which was inaugurated in 2019.
Regions in Siberia like Irkutsk have long been attractive destinations for cryptocurrency miners due to low electricity prices, a cold climate conducive to cooling equipment, and abundant renewable energy from hydroelectric power, exemplified by the Bratsk Hydroelectric Power Station with a capacity of 4,500 megawatts.
The Russian government's proposal to restrict cryptocurrency mining indicates the tension between developing this emerging technology sector and ensuring national energy security. Although new laws have been enacted to establish a legal framework for cryptocurrency mining activities, they also impose several restrictions, including banning foreign individuals from participating in mining in Russia and granting the government the authority to limit mining activities in areas at risk of electricity shortages.
