Russia Launches National Registry to Curb Unregistered Crypto Mining

Russia has officially launched a national registry system for mining equipment to curb unregistered cryptocurrency mining. Developed jointly by the Energy, Digital Development, and Federal Tax agencies, the system targets regions with intense mining activities. By accurately measuring the electricity consumption of facilities, the system provides a foundation for both taxation and regulation. The aim is to completely eliminate unregistered cryptocurrency mining.

Introduced as a proposal by the Ministry of Energy in February, this registry system seeks to eradicate illegal mining facilities straining the electricity grid. The database compiles all details, from model numbers to nominal watt values of each device, allowing distribution companies to monitor energy consumption in real time. The tax authority uses these data to match against miners’ online income declarations, preventing the misuse of lower tariffs.

Initially, the system was deployed in high hash rate regions like Irkutsk, Krasnoyarsk, and Yakutia. Officials indicate that the system will expand nationwide within the year, rendering unregistered cryptocurrency mining technically impossible. Energy planners view the registry system as strategic. With the total hash power of PoW-based crypto networks like Bitcoin, states can now manage their grid balancing objectives more effectively.

Just before the registry system’s implementation, the government suspended crypto mining in power-constrained regions for six years. This ban, effective in six regions until March 15, 2031, was introduced to prevent mining-induced power outages. Concurrently, the Federal Tax Service launched a portal for miners to declare earnings online, as part of President Vladimir Putin’s tax framework starting in 2025.

The Ministry of Digital Development has also drafted legislation that grants courts the authority to confiscate mining devices and unregistered cryptocurrencies. For repeated offenses, companies face fines up to 2 million rubles. Thus, Russia aims to exercise tighter state control over substantial hash power in networks like Bitcoin’s PoW.

This initiative is part of a broader effort to integrate cryptocurrency activities into the formal economy, reducing the risks associated with unregulated mining practices. The new system will require all cryptocurrency mining operations to register their equipment with the government. This registration process will involve providing detailed information about the mining hardware, its energy consumption, and the location of the mining facilities. By tracking these details, the government can better manage the energy demands of the mining industry and prevent unauthorized use of electricity. This is particularly important in Russia, where energy resources are significant but need to be allocated efficiently.

The initiative also addresses environmental concerns. Cryptocurrency mining is known for its high energy consumption, which can lead to increased carbon emissions. By regulating the industry, Russia aims to ensure that mining operations adhere to environmental standards, reducing their impact on the ecosystem. This move aligns with global efforts to make cryptocurrency mining more sustainable and environmentally friendly.

The registry system is expected to enhance the overall security and stability of the cryptocurrency market in Russia. Unregistered mining operations can be a breeding ground for illegal activities, including money laundering and fraud. By bringing these operations under regulatory oversight, the government can mitigate these risks and create a more secure environment for investors and users. This, in turn, can foster greater trust in the cryptocurrency market, encouraging more legitimate participation.

The launch of the national registry system is a significant step towards integrating cryptocurrency activities into the formal economy. It reflects Russia's commitment to regulating the industry while leveraging its potential benefits. By ensuring that all mining operations are registered and compliant with energy and environmental standards, Russia can harness the economic opportunities presented by cryptocurrency while mitigating the associated risks. This initiative sets a precedent for other countries looking to regulate their cryptocurrency sectors, demonstrating the importance of transparency, security, and sustainability in the industry.