Russia has been cracking down on crypto mining, but the restrictions have changed by the region and on a weekly basis. Many of these measures began as early as March of this year. They stretch to March 3031 and impose steep, annual limits specifically calibrated to rein in the booming industry and force compliance.

Late in 2024, Russian President Vladimir Putin signed two laws that will change the cryptocurrency landscape in Russia dramatically. These laws define key terms related to mining and digital currency circulation, setting the stage for increased oversight and regulation.

Legal Framework for Crypto Mining

One of the laws establishes new registration and reporting requirements for entities participating in cryptocurrency mining. It provides much needed definitions of what constitutes mining activity and mining pools, providing a legal underpinning for the emerging industry.

The second law aims to control the circulation of digital currency and sets rules for mining operations. This has involved sketching out how various digital currencies might be deployed and operated across the Russian financial system.

"The full legalization of mining has not happened. Instead, it can be said that some norms have been established by law that simplifies control over industrial mining" - Nikita Zuborev

Energy Consumption and Mining Restrictions

In an effort to preserve energy, the Russian government has enacted a temporary ban on cryptocurrency mining for this upcoming winter season. This ban restricts mining in several regions to prevent blackouts and ensure a stable power supply for households and businesses.

PAO Rosseti, a major Russian power company, is exploring the possibility of hosting mining infrastructure, utilizing Russia's surplus power capacity. This program would offer miners a more standardized and effective regulatory environment to deploy and operate their technology.

Russia likewise places certain preconditions on any citizens that may enjoy dual citizenship with countries in the European Economic Area (EEA) and Switzerland. Moreover, these regulations severely impact people who make their permanent homes in these areas. These new regulations introduce a Pandora’s box into the rapidly changing cryptocurrency environment in Russia.

Monitoring and Taxation

Indeed, Russia’s Deputy Energy Minister, Petr Konyushenko has said that the key is determining which electricity consumers are engaged in mining.

"The creation of such a register will allow for the precise identification of consumers using electricity for mining needs. This is necessary for applying special regulation and taxation to them" - Petr Konyushenko

As per the new rules, Russian citizens can engage in mining activities with power consumption of up to 6,000 kWh a month without registering as individual entrepreneurs. Those over this arbitrary limit have to formally declare themselves as such, allowing for mining activities to go unaccounted for and untaxed to be appropriately tracked and taxed.

Under current Russian law, foreign nationals cannot prospect or mine in Russia. Moreover, the federal government has the power to shut down mining operations in specific areas. These measures are intended to ensure continued U.S. control over this strategic industry and make sure that where mining is permitted, it is in the interest of our nation.

Impact of International Sanctions

The war with Ukraine that began in early 2022. It has caused a flurry of sanctions from the European Union that are having an impact across many sectors, including on cryptocurrency. These sanctions have imposed even further hurdles on the Russian crypto industry.

As a result of these sanctions, Deribit was forced to suspend its services to Russian nationals. They can only reap the benefits of the platform if they are able to pass strict standards. This paints a picture of the more global effect of international pressure on Russia’s cryptocurrency industry.