Russian Crypto Mining Faces Ban Until 2031

Key Points:

• Russia has imposed mining bans until 2031 in six Caucasus regions and parts of occupied Ukraine, with additional seasonal bans in Siberia to address electricity shortages.
• Russian crypto mining accounts for 1.5% of the country’s electricity use, but increased military and industrial power demands, along with grid vulnerabilities, have heightened concerns.

According to Bloomberg, Russia has imposed wide-ranging curbs on cryptocurrency mining in a number of its regions over growing electricity demand and vulnerable grids.

Read more: New Russian Crypto Law Comes Into Effect November 1

Russian Crypto Mining Hit With Long-Term Bans

The government has issued a ban on Russian crypto mining until 2031 across six Caucasus regions and parts of Ukraine currently under Kremlin control. These are imposed to alleviate power shortages straining the economy.

In addition, starting December 1, three southeastern Siberian regions near Lake Baikal will implement a six-year seasonal mining ban during peak winter consumption. These areas provide housing to some of Russia’s largest crypto miners, each attracted by low electricity costs and convenient power infrastructure. According to the Energy Ministry, the country’s crypto mining accounts for an estimated 16 billion kilowatt-hours yearly, comprising 1.5% of the country’s overall electricity usage.

A surge in the value of Bitcoin, together with China’s ban on the practice in 2021, has fueled the Russian crypto mining boom. International sanctions after Russia invaded Ukraine in 2022 made traditional banking difficult, making the Kremlin change its mind and legalize mining, then brainstorm ways to use digital tokens for cross-border payments.

Cryptomining Growth Clashes with Grid Stability Concerns

Despite the growth of the sector, the additional demand for electricity created by military and industrial operations related to the war has increasingly burdened the power grid. President Vladimir Putin and others have discussed their concerns pertaining to the “uncontrolled growth” in power demand from mining hubs.

Power consumption in the nation increased 1.4% last year and is predicted to grow at an average rate of 2.4% every year from 2025 through 2027. There were even more exposures from heat waves this summer that have caused blackouts in southern regions where up to 2.5 million residents are affected.