The landscape for bitcoin mining in Russia has completely changed following the enactment of the recent bitcoin mining framework, which gives the government the authority to limit activity in certain regions.
Read more: Russia’s Sweeping Crypto Mining Regulations Take Effect, Setting Strict New Rules
The confirmation of a seasonal ban for crypto mining activities in some regions, including Irkutsk, Buryatia, Transbaikal, Karachay-Circassia, Kabardino-Balkaria, Donetsk, and Lugansk People’s Republics, might give origin to illicit mining activities, given the recent hike in bitcoin prices. This might disrupt the energy supply of these regions, which are among the ones predicted to face power difficulties in the future.
Read more: 13 Regions Face Crypto Mining Ban Under Russia’s New Energy Policies
According to experts, there is a good chance that a significant number of mining companies will continue operating during these ban periods, undermining the purpose of the measure. Deputy chairman of the State Duma’s energy committee Yury Stankevich acknowledged this would happen “as long as mining remains profitable for most participants.” “Remember, Bitcoin reached an all-time high in November, climbing to $90,000,” he noted.
Energy think tank director Sergey Sasim agreed with Stankevich’s point of view, noting that if regions cannot enforce the ban, it could lead to the development of a gray mining industry, similar to what has occurred in other countries with similar restrictions.
President Putin has recognized the relevance of cryptocurrency mining activities, classifying Russia as “one of the world leaders in mining” due to the energy surplus of the Siberia region. Nonetheless, he added that while mining was significant, the strategic use of Russian energy for other essential productive activities in the country was “perhaps more important.”
Read more: Putin Acknowledges Russia as a Bitcoin Mining Leader; 54,000 BTC Mined in 2023
These restrictions, approved by Russia’s governmental commission on electricity development, will begin being applied on Dec. 1 and will limit mining in the mentioned regions from Nov. 15 to March 15 annually at least until 2031.
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