Russia has taken measures to limit cryptocurrency mining to specific regions in order to combat potential energy shortages over the winter.
The government commission responsible for the energy management of the country announced a season-long ban on mining in several Siberian areas.
Why are seasonal bans in place?
The report claims that there are seasonal bans in many Siberian regions because of the affordable electricity in these areas due to their proximity with hydropower plants. This has made them hubs for mining activities.
Due to the seasonal strain on energy grids and Siberia’s harsh Winters, authorities have prioritized domestic energy over industrial mining.
The restrictions also apply to those areas of Ukraine which Russia has declared as a war zone “annexed.”Since 2022, many of these regions have experienced significant damage to their infrastructure. This has led to frequent power outages.
In order to conserve limited resources for rebuilding the grid, it was deemed necessary by authorities to curtail energy-intensive activities such as cryptocurrency mining.
These measures come at a time when Russia is continuing to adjust its regulations on cryptocurrency. In July, Russian President Vladimir Putin approved a new law that allowed the experimental use cryptocurrencies for international transactions and foreign exchange.
It is worth noting that the Siberian region near Lake Baikal has been particularly affected by the new ban due to the low cost of energy. According to reports, hydropower plants located in these areas provide affordable electricity that attracts both domestic and international miner.
However, this increased consumption is creating challenges for the local energy supplies, especially in winter when heating and other essentials are at peak demand.
TASS, the Russian state-run news agency, had already reported this ban for specific regions of the country. Yevgeny G. Grabchak, the Deputy Director of the Ministry of Energy of the Russian Federation commented on this development:
Mining will be banned in some states in the near-future if we claim that digitalization is the precursor of mining. Anyone.
Meanwhile, Russia’s Ministry of Energy estimates that cryptocurrency mining consumes roughly 16 billion kilowatt-hours annually, equivalent to 1.5% of the country’s total electricity consumption.
Russia’s Continous Regulation Of Crypto
This development is noteworthy, as the Russian government recently implemented a tax of 15% on all crypto-mining and trading activities.
Related Reading: BRICS Nations Will adopt Bitcoin for global trade, VanEck Exec predicts
The Russian government has announced its intentions to launch a military campaign in Syria, particularly on November 18. “approval” draft amendments to the Bill addressing taxation of incomes and expenses related mining and trading of digital assets. The Russian Finance Ministry explained the reasoning behind this decision, noting that:
After discussions with the business community, it was decided that taxing the mining financial results would be the most fair way to reflect the outcomes of this activity. This is to maintain a balance between business and state interests.
The 1-day chart shows the global digital currency market capitalization value. Source: TradingView.com
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