Russia proposes criminal liability for illegal mining

The Russian government has proposed amendments to the Criminal Code introducing liability for illegal crypto mining. The initiative has already been approved by a legislative commission.

The proposal targets mining activities conducted outside official registries. This marks a major step in regulating the Bitcoin mining industry.

Authorities have developed a draft law targeting illegal mining

Authorities introduced a draft law adding Article 171.6 to the Criminal Code. It establishes penalties for illegal mining and unregistered infrastructure operations.

Punishments depend on the scale of damage or income.

Key provisions include:

• fines up to 1.5 million rubles for damage above 3.5 million;
• mandatory or forced labor;
• stricter penalties for damage above 13 million;
• prison terms of up to five years.

In all cases, illegally mined cryptocurrency may be confiscated.

Shadow mining remains a significant part of the market

The initiative is driven by low levels of industry legalization. Authorities estimate around 50,000 participants in the mining sector.

However, fewer than 1,500 entities are officially registered.

Key factors include:

• widespread illegal mining;
• tax avoidance risks;
• pressure on energy infrastructure;
• lack of market transparency.

The Ministry of Finance views mining as a legitimate economic activity. However, compliance with regulations is required.

Pressure on illegal miners is set to increase significantly

The introduction of criminal liability could reshape the crypto mining market. Pressure on unregistered operators will increase.

Companies may be forced to legalize operations.

Expected outcomes include:

• growth in registered mining entities;
• reduction of the shadow market;
• stronger regulatory oversight;
• higher operational costs.

Some operators may exit the market entirely.

Mining is moving toward a fully regulated environment

The proposal signals a shift toward stricter regulation of the Bitcoin mining industry in Russia. Authorities aim to formalize the sector and increase tax revenues.

Officials are considering a “carrot and stick” approach. Legalization is encouraged, but penalties are increasing.

Key trends include:

• transition to a regulated market model;
• stronger government involvement;
• increased transparency requirements.

In the long term, the industry may consolidate. Larger and compliant players are likely to dominate.

Read also: Russian mining tax revenue falls below expectations