Russia Creates Registry to Curb Illegal Crypto Mining

Russia has taken a significant step towards regulating its cryptocurrency mining industry by creating a special registry for mining equipment. This initiative, led by the Ministry of Energy, the Federal Tax Service, and the Ministry of Digital Development, aims to curb illegal mining activities that have been a persistent issue in various regions of the country.

The registry, which includes information on devices used for cryptocurrency mining, has already been shared with local authorities. This move is expected to help identify consumers using electricity for mining purposes, enabling the application of special regulations and taxation. Deputy Energy Minister Petr Konyushenko highlighted that this step is crucial for legalizing the industry and reducing the illegal consumption of electricity, which has led to significant losses for power distribution companies and the state, as well as energy deficits in certain areas.

The idea for a unified register of mining equipment was proposed during a working meeting on the regulation of digital currency extraction in February and was supported by the Russian Ministry of Industry in May. This development comes after Russia legalized cryptocurrency mining with a law adopted in the summer of 2024, allowing both companies and individual entrepreneurs to legally mint digital coins, provided they register with the tax authority and pay the necessary taxes.

Private citizens are permitted to mine without registration as long as their electricity consumption does not exceed 6,000 kWh a month. However, all miners, including those who do not need to register, are required to inform the Federal Tax Service about the amount and value of the mined cryptocurrency.

Despite these regulations, Russia has struggled to bring all its miners into compliance. Less than a third of all Russian mining enterprises have registered with the Federal Tax Service, and the new register of mining machines is intended to increase the share of legal mining businesses. Other authorities, such as the national grid operator Rosseti, are also involved in the effort to identify illegal mining facilities by tracking internet traffic with the help of telecom companies and mobile operators.

The Russian government has imposed seasonal and permanent restrictions on mining activities in various regions to mitigate the negative consequences of the mining boom, which has caused electricity shortages. Mining has been completely banned for six years in a dozen regions. President Vladimir Putin justified these measures by emphasizing the need to balance the exploitation of Russia’s natural resources, acknowledging that governors have been complaining about growing energy deficits.

Law enforcement and other officials have been actively cracking down on mining facilities that illegally tap into electricity networks, particularly in energy-deficient regions. For instance, authorities in Krasnoyarsk Krai, a major mining hotspot in Siberia, recently busted a massive crypto farm occupying almost 30,000 square meters of land, which was officially registered as a non-residential building on an industrial plot.

This comprehensive approach by the Russian government to regulate and legalize the cryptocurrency mining industry is a significant move towards ensuring that the sector operates within the bounds of the law, reducing the strain on the country's energy resources, and promoting sustainable development.