The Russian Government issued a ban on crypto mining in 10 regions of the country over reports of energy shortage and concerns over an imbalance in energy consumption.
The reported ban would take effect from the 1st of January 2025 and last till March 15, 2031.
Official documents confirming the ban were obtained by Russian Local Media Tass highlighting the 10 regions affected by the ban.
The Cabinet of Ministers is introducing a “ban on digital currency mining, including participation in a mining pool (an association of miners) in Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, Chechnya, the Donetsk, and Lugansk People’s Republics, and in the Zaporizhia and Kherson regions, The resolution read.
Additional regions affected by the ban include the Irkutsk Region, Buryatia, and the Zabaikalsky Krai, during peak energy consumption
List of Banned Regions Still Subject to Change
The Cabinet of Ministers explaining the development to Russian local media confirmed that the list of banned regions is not final and still subject to change.
The list can still be changed based on the decision of the Government Commission on issues of Energy consumption.
Ban Linked to Energy Shortage and Benefits
Sergey Kolobanov, deputy director of the Center for the Economy of Fuel and Energy Sectors at the Center for Strategic Research explained to Russian Local media TASS the two core motives behind the ban from the Russian government.
He explained that the Ban is not just linked to Energy shortages but also to the proposed benefit of paying for electricity in some regions.
“ The so-called interregional cross-subsidization, when the low cost of electricity in the regions of regulated contracts is de facto compensated by producers and consumers in other regions,” he explains.
“The terms of restrictions on cryptocurrency mining are synchronized with the end of the transition period for the elimination of this benefit,”
“After the market liberalization, the restrictions in this part may well be lifted, provided, of course, that there is sufficient capacity. Sergey Explained further
Vladimir Klimanov, Director of the Center for Regional Policy at the IPEI of the Presidential Academy added to the above explanation by stating that the cost of electricity in under-tariffed regions is often offset by residents and businesses in Central Russia which isn’t fair.
The new ban looks to rejig energy distribution to more equitable and favorable proportions amongst the vast Russian regions.
Mining still Legal in other parts of the country
Mining remains legal in other parts of the country following its official legalization in November.
Mining in Russia comes with the precondition that the assets received and the addresses of crypto wallets are provided to the Federal Tax Service (FTS).
The FTS launched a structured framework to record and curate the activities of Miners in the country to regulate the space.
An efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin.
According to the EIA, Russia’s total installed electricity generation capacity is around 301 gigawatts (GW), with fossil fuels accounting for the majority of this capacity at 72%.
