Russia to ban crypto mining in the Russia-Occupied Ukraine territories

Deputy Prime Minister of Russia, Alexander Novak, convoked a meeting with senior officials to ban cryptocurrency mining in Russia occupied territories of Ukraine to conserve electricity. 

Authorities in Russia intend to ban cryptocurrency mining in certain areas, including occupied territories in Ukraine, to ensure a smooth operation in the event of power shortages ahead of the heating season. There will be specific bans on cryptocurrency mining in certain areas, including the occupied regions of Donetsk, Luhansk, Zaporizhizhia, and Carson in Ukraine. Parts of Russia, such as Siberia and the North Caucasus, will also be under the ban. 

In Siberian regions such as Irkutsk, Buryatia, and Zabaikalsky, mining will be restricted seasonally, starting from Dec 1, 2024, to Mar 15. 2025, and will continue to be restricted annually from Nov 15 to Mar 15 until 2031. However, the North Caucasus and the occupied territories will see a complete halt on crypto mining from December 2024 until March 2031 with no seasonal exceptions. 

This decision comes after President Vladimir Putin signed a new crypto regulation on Nov 1 this year. The laws allow crypto mining with strict regulatory oversight and set up experimental frameworks for cross-border cryptocurrency payments. The bill also prohibits domestic crypto transactions to ensure economic stability. As the second largest mining center globally, following the United States, Russia uses around 16 billion kilowatt-hours of electricity each year for mining. This accounts for about 1.5% of its overall energy consumption and rose three times in 2023, as per data by Statista. 

In addition to restricting mining activities, Russia has also made changes to its tax regulations regarding cryptocurrency. From now on, income earned from mining will be taxed according to its market value at the time it is received, with allowances for deducting operational expenses. While transactions involving cryptocurrency would not be subjected to value-added tax, profits will be taxed under a securities tax framework with a personal income tax rate set at a maximum of 15%. 

Furthermore, Russia plans to establish a national cryptocurrency exchange in Moscow and St. Petersburg, reflecting a dual approach to regulating digital assets while addressing energy challenges. The ban on mining in Russian occupied Ukrainian regions also suggests that Russia is looking to strengthen its control over local resources, adding fuel to the already rickety geopolitical tension.