According to a recent report, the share of crypto miners in Russia’s electricity consumption has exceeded 2%. The country’s technology ministry is now calling for the sector’s regulation.
Russia’s Crypto Mining Activities
As per a study conducted by the Cambridge Center for Alternative Finance in October 2021, Russia is among the top five countries with the fifth-highest Bitcoin hash rate. The US is responsible for over 35% of the total, followed by Kazakhstan and Russia at 18.1% and 11%, respectively.
Meanwhile, a new draft law that would give cryptocurrency miners in Russia a one-year tax break has been replaced by an earlier bill. The reason for this is that the previous proposal would have caused the state budget to lose money.
More Electricity is Consumed by Crypto Miners than by Russian Farmers
According to Vasily Shpak, the activities of miners who extract digital currencies in Russia have to be regulated. They account for over 2% of the country’s electricity consumption.
During a discussion about the mining industry in Russia, Shpak noted that it is more expensive than electricity for agriculture. He argued that it should be regarded as an industry.
He noted that the activities of miners are not taxed in any way, which creates risks for them. Shpak believes that the industry should be brought out of the shadows and appropriately regulated. He believes that the government should be able to make the industry transparent.
According to the deputy minister, the mining industry is expected to reduce its electricity consumption as it moves toward a more sustainable approach. The deputy minister noted that despite reducing electricity consumption, the mining industry would continue to consume power. He further emphasized: Our position is entirely unambiguous — mining must be recognized, regulated, and established as an industrial activity.
Despite its abundant energy resources, Russia still sees itself as a potential mining nation due to its favorable climate and natural resources. However, due to the sanctions imposed by the West, the country’s mining industry has been hit hard. Notably, the Russian hash rate share in the average global hash rate fell to 4.66% this year.
Crypto Mining Legislation Submitted Without Amnesty for Miners
The State Duma has again introduced legislation aimed at regulating the activities of cryptocurrency miners. The new version of the bill does not include many of the proposed changes in April. According to the deputies, the new legislation would have increased the tax burden on miners and raised the budget’s debt. On the other hand, the operators of mining facilities will not have to check the sources of their funds.
In the previous draft law, the government officials created a special register for entities involved in crypto mining. These entities would not be required to clear customs duties on their import hardware.
The original bill included a provision that would have exempted certain types of transactions involving the mining of digital currencies from paying Value-added Tax. These benefits have since been removed. According to reports, the new legislation still has the same effect as the original bill.
Officials in Russia believe that the activities of cryptocurrency miners should be regulated and recognized as a business activity. According to the latest draft law, the creation and use of digital currency in the country is considered a process that uses the country’s infrastructure and equipment.
In February, the Ministry of Finance presented a new bill to regulate the activities of cryptocurrencies. The bill’s goal is to fill the regulatory gaps that were left after the implementation of a law on digital financial assets in January last year.
Source: https://crypto.news/russia-crypto-miners-2-electricity-estimates/