Russia Faces $122 Million Tax Loss from Illegal Crypto Mining

Illegal crypto mining operations in Russia are causing the country to lose 10 million rubles, or $122 million, a year from uncollected taxes. 

Despite legalizing the sector last year, underground crypto operations are skirting the federal tax authority.

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Tax Evasion and Hidden Mining Hubs

Hundreds of millions of dollars in taxes are evading Moscow’s grasp due to unreported income from illegal crypto mining.

Despite Russia legalizing crypto mining in August last year, many informal mining operations continue evading the federal tax authority. This widespread tax evasion reportedly costs the country over $122 million in missing tax revenue.

According to reports from local Russian outlets, most illegal mining hubs exploit abandoned factories and farms in remote areas with existing power connections. Their unusually high electricity consumption and frequent power grid disruptions give away their presence.

Current Mining Bans and Enforcement Efforts

According to current legislation, corporations and individual entrepreneurs must join a special registry to mine. Private citizens can mine without registering if they consume under 6,000 kilowatt-hours monthly. The law specifically prohibits energy companies from mining. It also bans individuals with unexpunged records for economic, extremist, or terrorist crimes.

Illegal miners currently face weak penalties. Their violations are often classed as unauthorized grid connections. Fines range from 10,000 to 200,000 rubles. 

According to reporting from BeInCrypto Russia, this legal loophole will soon close. A new amendment to the Code of Administrative Offenses will allow for stricter punishment for illegal mining. 

Russian authorities are trying to combat unregulated mining by imposing temporary regional bans. Restrictions are in place year-round in the North Caucasus. Meanwhile, regions such as Irkutsk, Buryatia, and the Transbaikal Territory are subject to seasonal or temporary restrictions.