Written by: Biteye core contributor Viee
Editor: Crush, core contributor of Biteye
The hottest news today is that Russia allows cryptocurrency mining! This is a milestone event that will go down in history.
According to TASS, Russian President Vladimir Putin signed a law legalizing cryptocurrency mining in Russia on August 8, indicating that the BRICS alliance has reached an important development node in the field of digital currency.
Let's take a look at the main contents of the bill:
New concepts such as digital currency mining, mining pools, and mining infrastructure operators have been introduced, and mining is regarded as a part of economic activities rather than simply the issuance of digital currency.
Only Russian legal entities and individual business owners registered with the Russian digital department can legally mine.
Ordinary citizens who do not exceed the government's energy consumption limit can also engage in small-scale mining without registration.
Foreign digital financial assets are allowed to be traded on Russian blockchain platforms. The Russian Central Bank has the right to ban the issuance of individual digital assets if they pose a threat to financial stability.
Require miners to provide the government with information on the digital currency they mine to ensure compliance.
This is not the first pro-cryptocurrency law passed by Russia this year. Back in late July, Russia had decided to allow the use of cryptocurrencies for payments in international trade in response to Western sanctions.
What does Russia’s opening up to cryptocurrencies mean?
You know, Russia’s participation in the Bitcoin field is actually quite significant and it can be called a big player. As early as 2021, Cambridge Center for Alternative Finance statistics showed that the United States is the world's largest consumer of Bitcoin electricity, accounting for 35.40%.
It is followed by Kazakhstan (18%), Russia (11.23%), Canada (9.6%) and Ireland (4.7%). By July 2024, cryptocurrency mining in Russia will account for 1.6% of the country's electricity consumption.
Looking at the above data, if the crypto market is compared to a large-scale game, Russia seems to have long been an advanced player that has stepped out of the novice village. However, this is not the case. Russia has been wavering on its cryptocurrency policy in recent years.
Before 2017, the Russian government and central bank were highly wary of cryptocurrencies, believing them to be risky and primarily concerned that they could be used for illegal activities such as money laundering.
Russia began to explore how to effectively regulate cryptocurrencies in 2019. In terms of regulatory policy, the Ministry of Finance tends to be more relaxed, while the central bank advocates strict control and even suggests banning the use of private cryptocurrencies.
By 2020, Russia passed the "Law on Digital Financial Assets", which recognized cryptocurrencies as property but prohibited their use to pay for goods and services, marking the initial establishment of the legal status of cryptocurrencies.
Over time, the Russian government’s attitude towards cryptocurrencies has gradually become more positive in the past two years. On December 14, 2023, the Russian Ministry of Finance proposed a new bill aimed at legalizing Bitcoin (BTC) mining and establishing a mechanism for selling mined currencies.
The bill includes provisions that ban cryptocurrency advertising and require cryptocurrency sales to be conducted through foreign platforms, prohibiting the use of Russia's information infrastructure.
By May 2024, Anton Gorelkin, Chairman of the State Duma Committee on Financial Markets, expressed opposition to a complete ban on the circulation of cryptocurrencies, emphasizing the importance of regulating cryptocurrency trading platforms within the legal framework.
Until today, Russia officially legalized cryptocurrency mining.
From cautious to open, Russia's attitude towards cryptocurrency mining has undergone a 180-degree reversal! Putin's series of policy adjustments reflect his determination to seek new growth points and gain a foothold in the global digital economy.
Let's think about what exactly caused Russia's attitude to change so drastically. It can probably be summarized as follows:
1. The need to respond to Western sanctions
As Russia's relations with Western countries become increasingly tense, it has been subject to a series of economic sanctions. Using cryptocurrencies for cross-border payments and transactions can help Russia bypass sanctions and enhance its trade capabilities with other countries, especially non-Western countries.
2. Seek new economic growth points
The Russian government realizes that cryptocurrencies and blockchain technology have great economic potential. By legalizing cryptocurrency mining and trading, it can bring new sources of tax revenue to the country. The Ministry of Finance estimates that starting in 2023, tax revenue from cryptocurrency trading and mining activities could reach 2.5 billion rubles (about $340 million) per year.
3. Give full play to your own advantages
Russia has certain advantages in energy and computing power, which provides good conditions for cryptocurrency mining. In 2022, President Putin emphasized during a meeting with the government that Russia has advantages in cryptocurrency mining due to the presence of experts in the field and excess electricity.
4. Gradual improvement of the regulatory framework
Russia began exploring how to effectively regulate cryptocurrencies in 2019, and although the Ministry of Finance and the central bank disagreed on specific policies, this laid the foundation for subsequent policy changes. The Digital Financial Assets Law passed in 2020 also marked an important step in Russia's legal status of cryptocurrencies.
In short, Russia’s new regulations on cryptocurrency mining are not accidental, but the result of a series of policy discussions and preparations, and the government has gradually opened its arms to the cryptocurrency industry.
With the support of such a major positive factor, Bitcoin did not disappoint the market. Yesterday, it climbed from US$55,000 to US$61,000 in one day, setting the second largest market value increase in history!! The first market value increase occurred in the last bull market on February 8, 2021, with an intraday increase of 19.54%!
Looking ahead, as cryptocurrency policies are further improved and international markets change, Russia is likely to play an increasingly important role in the global digital economy.
The price fluctuations of digital assets such as Bitcoin will continue to attract investors' attention, and Russia's policy orientation will have a profound impact on the global cryptocurrency market, and it is also an important challenge facing Russia.
With the support of world leaders such as Trump and Putin for Bitcoin, cryptocurrencies are gradually being recognized by mainstream governments. This shift marks the transition of Bitcoin from the periphery to the center, and continues to inject new impetus into the diversified development of the global economy in the international financial market.
