Authorities and Businesses at Odds Over Mining Regulation
Ahead of the first reading of the mining regulation bill, scheduled for July 23, the Industrial Mining Association (IMA) has appealed to the government and the State Duma to exclude provisions banning cryptocurrency mining in energy-deficient regions. Letters addressed to Prime Minister Mikhail Mishustin and State Duma Speaker Vyacheslav Volodin emphasize the significant risks associated with implementing such restrictions, according to Iz.
The bill, introduced to the State Duma in November 2022, proposes the legalization of cryptocurrency mining and the declaration of income from this activity. The Ministry of Finance anticipates the adoption of the bill in 2024, hoping for approval by August. However, the Ministry of Energy considers it permissible to partially or completely restrict mining activities in energy-deficient regions. Deputy Minister Pavel Snikkars noted that this decision could be approved, but the final say rests with the government and the State Duma.
The IMA argues that granting the government the authority to ban mining activities in specific regions disrupts the balance between private and public interests. The letters also highlight that the bill does not regulate the participation of foreign entities in cryptocurrency mining within Russia. The association believes that restrictions on access for foreign investors from friendly countries, such as China and the Persian Gulf states, could harm the country’s foreign economic activities and reduce its technological development potential.
The Ministry of Energy, on the other hand, sees restricting electricity consumption by miners in energy-deficient regions as acceptable. However, Gordey Smirnov, an analyst at Finam Group, believes that about 40% of the market is occupied by “grey” miners who covertly consume electricity at lower household rates. He suggests creating conditions to bring “grey” crypto farms into the legal field.
After the bill’s adoption, market participants could emerge from the “grey zone,” with both foreign and Russian players paying taxes to the budget. This would also facilitate cross-border transactions. Experts believe that regulating the industry will help create transparent conditions for tracking cryptocurrency movements within the country.
Oleg Ogienko, Director of Government Relations at BitRiver, thinks that the ban should only apply to “grey” and “black” mining, while “white” mining should operate under clear rules, both in the electricity sector and in the broader economic context, which still need to be legislatively established.
