- Russia plans to ban cryptocurrency mining for winter
- These actions follow new crypto-mining laws signed by President Vladimir Putin
- Crypto has been a valuable asset during the Ukraine-Russia conflict
Russia plans to ban cryptocurrency mining for winter
Russia is one of the largest hubs for mining cryptocurrency. Mining consumes around 16 billion kilowatt-hours per year. According to the Energy Ministry, this represents 1,5 % of Russia's total electricity use. Russia is among other leaders in crypto, like the US, China, Kazakhstan, and Canada, and remains at the top.
The country has been adapting to the innovations and advances of other parts of the world, and mining has only been legalized this year. Russian authorities announced their plans to ban crypto mining in several regions this winter to prevent electricity shortages[1].
The bans will affect the Irkutsk region, parts of the Republic of Buryatia, the Zabaikalsky region in Siberia, and six North Caucasus regions, including Chechnya and Dagestan. They will also apply to the occupied Ukrainian regions of Donetsk, Luhansk, Zaporizhzhia, and Kherson.
Deputy Prime Minister Alexander Novak's commission introduced these restrictions to reduce crypto mining during winter. In Siberia, mining will stop from December 1, 2024, to March 15, 2025, with yearly bans from November 15 to March 15 until 2031. According to reports, the ban will be permanent in the North Caucasus and occupied Ukrainian regions, starting December 2024 and lasting until March 2031, with no seasonal breaks.
These actions follow new crypto-mining laws signed by President Vladimir Putin
V. Putin signed a new crypto regulation on November 1. These laws allow crypto mining with particular strict regulatory oversight and set up experimental frameworks for cross-border cryptocurrency payments. Although domestic crypto payments remain illegal, some lawmakers suggest these rules could help bypass international sanctions.
The bill should also ensure economic stability by prohibiting domestic crypto transactions. In addition to restricting mining activities, Russia also changed its tax regulations related to cryptocurrency. Now, income earned from mining will be taxed according to its market value at the time it is received. Profits will be taxed under a securities tax framework with the personal income tax rate, which is set to a maximum of 15%[2].
Russia also plans to establish a national cryptocurrency exchange in Moscow and St. Petersburg. The country aims to regulate digital assets while addressing energy challenges. The upcoming ban on mining in these particular regions of Ukraine that Russia has occupied shows another aim to control local resources. This move also furthers geopolitical tension.
Crypto has been a valuable asset during the Ukraine-Russia conflict
When Russia invaded Ukraine in 2022, Bitcoin faced an 8% decline, and the price dropped to $34,000. At the time, the cryptocurrency market witnessed a $150 billion wipeout overall. The effect on cryptocurrency was also experienced when the Israel-Iran conflict escalated in October.
Bitcoin, like Ukrainians, showed particular resilience when tension between these two countries escalated. The situation remained pretty much the same. Geopolitical events often influence the specific highs or lows of certain cryptocurrencies.
Recently, when the US granted Ukraine the opportunity to attack Russian territory with ATACMS missiles, escalating the conflict, Bitcoin was expected to react. However, the cryptocurrency rose to a high of $94,000 with a market cap of $1,86 trillion[3].
Cory Klippsten, CEO of Swan Bitcoin, commented on this behavior. He thinks such actions can reflect Bitcoin's maturing store-of-value narrative. "Traditionally, geopolitical instability sends investors flocking to safe-haven assets like gold or the dollar. But Bitcoin’s recent all-time highs indicate it’s entering a new role as a hedge against both money printing and geopolitical risk."
