The Russian government has recently extended its winter ban on local crypto mining operations to six years due to the alarming rise in energy consumption in the country. Initially, the government had ordered crypto mining entities to pause their operations for the winter season, but now the ban has been extended until March 15, 2031. This ban includes not only local crypto mining but also participation in mining pools in select regions and territories in Russia.
The affected regions have not been finalized yet, but the list currently includes areas such as Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, Chechnya, the Donetsk Republic, the Lugansk People’s Republic, Zaporizhia, and Kherson. The government may make changes to the list based on decisions regarding energy development. In addition to these regions, there are also temporary prohibitions on crypto mining in territories in the Irkutsk, Buryatia, and Zabaikalsky Krai regions during peak energy consumption periods.
The Russian government’s decision to ban crypto mining in certain regions is aimed at maintaining the country’s energy consumption balance. Russia became the world’s second-largest crypto miner after the United States last year and has been utilizing at least 16 billion kilowatt-hours of electricity annually for mining activities. Crypto mining currently accounts for 1.5% of Russia’s overall energy consumption, creating challenges for regions with harsh climates and causing an imbalance in electricity payments across the country.
Sergey Kolobanov, deputy director of the Center for the Economy of Fuel and Energy Sectors at the Center for Strategic Research, highlighted the issue of interregional cross-subsidization due to the low cost of electricity in certain regions being compensated by producers and consumers in other regions. The restrictions on crypto mining are synchronized with the end of the transition period for the elimination of this benefit. The government is working towards reducing or eliminating the imbalance caused by high energy consumption in the country.
Despite the ban on crypto mining in select regions, Russia recently legalized crypto mining and introduced a mandatory registration service. This service allows the Federal Tax Service to obtain information on miners’ assets and crypto wallets. The government is taking steps to regulate the crypto mining industry while also addressing the challenges posed by high energy consumption. By extending the ban on mining operations, Russia aims to ensure a more sustainable balance in energy consumption and payments across the country.
