Russia Introduces Mining Ban in Certain Regions
The Russian government has announced a draft resolution to ban or impose restrictions on cryptocurrency mining activities in specific regions. The ban is set to come into effect on January 1, 2025, and will be in place until March 15, 2031.
According to reports from TASS, the mining ban will impact regions such as Dagestan, Ingushetia, Chechnya, Kabardino-Balkaria, and North Ossetia. The restrictions will cover all mining operations and participation in mining pools. Additionally, the ban will not be enforced in certain areas like Luhansk and Donetsk People’s Republics, as well as selected localities in Zaporizhia and Kherson.
Furthermore, the restrictions will extend to specific sites in the Irkutsk Region, Buryatia, and Zabaikalsky Krai during peak load hours. Starting in 2025, the bans will be in place from January 1 to March 15, with subsequent years seeing restrictions from November 15 to March 15. These measures aim to regulate energy consumption and ensure a balanced distribution of resources across different industries.
Experts believe that the decision to ban crypto mining is driven by energy shortages and the subsidized cost of bandwidth in certain markets. Sergey Kolobanov from the Center for Strategic Research points to the need to address interregional cross-subsidization, where cheap energy in regulated regions is compensated for by other areas. The restrictions are part of a transition period to eliminate such benefits and pave the way for power privatization in the future.
The Cabinet of Ministers has indicated that the list of affected regions may be subject to revision based on recommendations from an electricity commission. The authorities have justified the ban by citing energy shortages and disparities in electricity pricing. Regulated regions benefit from lower electricity costs, which are cross-subsidized by producers and consumers in other areas.
Earlier this year, Russia implemented a 15% tax on Bitcoin mining profits, further tightening regulations in the industry. The mining ban comes as a response to ongoing energy shortages and differing electricity pricing across the country. With energy consumption on the rise and power generation decreasing, the ban aims to address imbalances in the system and prepare for the privatization of power infrastructure.