Russia Bans Subsidized Power for Crypto Mining in Data Centers

The Russian government is set to implement a ban on domestic data processing centers using subsidized power for cryptocurrency mining. This move is part of a revised draft law on mining, which was initially passed in the State Duma in 2022 and is currently undergoing refinements ahead of its second reading. The proposed legislation aims to prevent miners from benefiting from subsidized electricity rates by requiring data processing centers to register with the Ministry of Digital Development and Communications and pledge not to engage in crypto mining activities.

The bill stipulates that only data centers recognized as "communication facilities" will be eligible for preferential electricity rates. This recognition process involves operators committing to not house crypto mining hardware, even if it is not connected to the internet. The voluntary registry system is designed to ensure that subsidized power is used for legitimate purposes rather than for crypto mining, which has been a contentious issue in recent months. Lawmakers have been pushing for special unsubsidized rates for crypto mining companies to address the growing demand for electricity in the sector.

Industry experts have mixed reactions to the proposed legislation. Some, like Artem Shchepinov, Director-General of Intelion, view it as a step towards technological sovereignty and a more regulated digital infrastructure. However, others express concern that the new law could negatively impact both the industrial crypto mining industry and conventional data centers. Despite these concerns, major industrial miners claim that the move will have minimal impact on their operations, as they are already self-sufficient and do not rely on government support.

Many major industrial miners operate dual-use centers that can accommodate both mining and conventional IT resources. Intelion, for example, has already begun preparing for the change by dividing its facilities into clusters that provide crypto mining and AI computing in parallel. This strategic move ensures that the company can continue its operations without being affected by the new regulations. The industry's focus on Bitcoin (BTC) remains strong, with around 90% of Russian industrial miners concentrating their efforts on this cryptocurrency. However, home-based miners in the nation prefer to mine Ethereum (ETH), reflecting the diverse interests within the crypto community.