During a recent meeting, Russian President Vladimir Putin expressed concerns about the impact of cryptocurrency mining on the national grid and called for the expansion of Russia’s central bank digital currency (CBDC), i.e. the implementation of a digital ruble.
Cryptocurrency mining exacerbates power supply constraints
Putin stressed that uncontrolled electricity consumption by Bitcoin and other cryptocurrency mining operations is leading to power shortages in regions such as Irkutsk, the Republic of Buryatia and Transbaikal Krai. He described the situation as "serious and fraught with serious consequences", which could cause damage to businesses, residential areas and social facilities, and could disrupt investment and infrastructure projects.
According to Putin, cryptocurrency mining in Russia consumes 16 billion kilowatt hours (kWh) of electricity annually, accounting for 1.5% of the country’s total electricity consumption. Usage has been rising due to low electricity prices in Russia and the ease of relocating and installing mining equipment.
Putin urges legislation for mining
In response to these issues, Putin proposed the need for Russian federal mining legislation, including taxes and tariffs, to more effectively regulate the industry.
This is what Russian lawmakers have been discussing recently, as they plan to discuss draft legislation that would only allow approved companies to conduct large-scale crypto mining operations. The legislation would also empower the government to ban mining activities in energy-scarce areas.
The legislative proposals aim to address the power consumption of cryptocurrency mining while ensuring the industry operates within a regulated framework, AFP reported on July 17. Additionally, Russian newspaper Business Day reported a week ago that the Russian State Duma’s Financial Markets Committee approved a draft bill to decriminalize cryptocurrency mining while continuing to ban the use of cryptocurrencies for settlement. Currently, Russian law prohibits cryptocurrency settlements, but allows the circulation of cryptocurrencies.
Extended digital ruble
During the meeting, Putin also stressed the need for "more comprehensive implementation" of Russia's CBDC, the digital ruble. He shared that the digital ruble pilot program has been quite successful, processing more than 27,000 transfers and 7,000 payments for goods and services. The pilot, involving 12 banks, 600 individuals and 22 trade and service companies from 11 cities, demonstrated the "performance and functionality" of the digital ruble.
The future of the digital ruble
In a June report, the chairman of the Russian State Duma's Financial Markets Committee said Russia could start using the digital ruble domestically in the second half of 2025. Russia’s central bank launched a digital ruble pilot program in August 2023, signaling an important step in modernizing the country’s financial infrastructure.
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