Russia Imposes Crypto Mining Restrictions to Conserve Energy

• Russia introduces crypto mining restrictions in 13 regions to reduce power grid strain and manage energy use.
• Unregistered cryptocurrency miners face a 6,000 kWh monthly energy cap, requiring official registration.
• New tax laws classify cryptocurrency as property, taxing mining income and exempting crypto transactions from VAT.

Russian President Vladimir Putin has approved new restrictions on cryptocurrency mining across 13 country regions. The measures, aimed at reducing strain on the power grid, will be in effect from December 2024 through March 2031.

These new policies focus on regulating miners, limiting power consumption, and introducing taxation requirements for operations. 

The mining restrictions will apply in several regions, including Siberia, the Republic of Buryatia, and some parts of the occupied Ukrainian territories, such as Donetsk and Luhansk. The affected regions will be subject to these energy-saving measures during the peak winter months when electricity usage rises. 

The restrictions specifically target the Irkutsk region, known for its cheap electricity and hydropower resources that attract many cryptocurrency miners.

However, these measures are expected to significantly impact mining activities in the area, reducing operations due to the government’s efforts to curb energy consumption. 

The government has set a monthly energy cap of 6,000 kWh for unregistered cryptocurrency miners to regulate energy use further. Those who exceed this threshold will be required to register as entrepreneurs, effectively legalizing their operations under the new regulations. 

This initiative aims to control unregistered mining activities, contributing to rising power demands. The Russian government is focusing on ensuring that only registered miners contribute to the energy grid, requiring them to comply with energy-saving protocols.

Russia has introduced new tax regulations for cryptocurrency mining and transactions alongside these energy restrictions. Crypto assets will be classified as property for tax purposes, with mining and trading income subject to taxation based on market value. 

Miners will be allowed to deduct operational expenses when calculating their taxable income, but value-added tax will not apply to crypto transactions. Mining infrastructure operators must also submit regular reports to ensure compliance with tax laws.