Russia has taken steps to this end to limit cryptocurrency mining in specific regions to address potential energy shortages during the winter months.
The government commission that oversees the country’s energy management has announced a seasonal ban on mining activities in several Siberian regions.
Reason behind the seasonal bans?
According to the report, the seasonal bans in multiple Siberian regions in Russia are due to the fact that these areas are known for affordable electricity due to their proximity to hydroelectric power stations, making them hubs for mining activities.
The seasonal pressure on the energy network, coupled with Siberia’s harsh winters, has led authorities to prioritize domestic energy needs over industrial mining activities.
The restriction also extends to areas in Ukraine that Russia has declared “annexed.” Many of these regions have suffered significant damage to their energy infrastructure since 2022, causing frequent power outages.
With limited resources to rebuild the network, authorities have deemed it necessary to curb energy-intensive activities such as cryptocurrency mining.
These measures come as Russia continues to adjust some of its cryptocurrency regulatory rules since Russian President Vladimir Putin issued a law allowing the experimental use of cryptocurrencies for international payments and currency transactions in July.
Siberian regions near Lake Baikal are particularly affected by the ban, as they have become popular hubs for crypto mining due to low energy costs. According to reports, hydroelectric power plants in these areas traditionally provide affordable electricity and attract both domestic and international miners.
However, increased consumption has created challenges for local energy supplies, especially in winter when demand for heating and other essential needs rises sharply.
Prior to the completion of this seasonal ban, the Russian state news agency TASS had already reported initially reported that this ban would take place in specific parts of the country. Commenting on this development, Yevgeny Grabchak, Deputy Head of the Ministry of Energy of the Russian Federation, noted:
If we say that mining is the precursor of digitalization, mining will be banned at the state level in some regions in the near future. Everyone.
Meanwhile, Russia’s Ministry of Energy estimates that cryptocurrency mining consumes around 16 billion kilowatt hours annually, equivalent to 1.5% of the country’s total electricity consumption.
Russia’s continued regulation of cryptocurrencies
It is worth noting that this development comes at a time when the Russian government has recently done so introduced a 15% tax on all crypto mining and trading activities.
Notably, on November 18, the Russian government announced its “approval” of draft amendments to the bill that address the taxation of income and expenditure related to mining and digital asset trading. The Russian Finance Ministry highlighted the rationale behind this move, noting:
As a result of discussions with companies, it was decided whether it was appropriate to tax the financial results from mining as the fairest reflection of the results of this activity. This approach aims to maintain a balance between the interests of companies and the state.
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