Russia’s enforcement has stopped expanding the crypto mining ban, which already adds several regions to a long list of territories where activities are severely restricted.
On Thursday, the Moscow government scrapped or postponed measures to curb electricity consumption by Bitcoin miners across Lake Baikal from the Finnish border, pointing to the expected decline in tax and energy revenues as the main reason for the U-turn.
Russian authorities step back to ban crypto mining
The Russian central government has decided to refrain from introducing restrictions on cryptocurrency mining in more regions and suspend the planned expansion of the ban, which has already been affected by around 12 federal subjects.
The course change was chaired by Deputy Prime Minister Alexander Novak, announced on June 5th in the mail of the Cabinet’s Telegram Channel and adopted at a meeting of the Government Committee on the Development of the Electricity Industry.
According to a press release, participants considered requests from several Russian regional authorities seeking permission to suspend mining operations, which have often been criticized by local officials for power shortages and power outages.
A meeting of the Committee on Development of the Electricity Industry. Source: Russian Government
The committee refused to ban the activities of cryptominers in the Republic of Hacasia, citing the lack of proper forecasts regarding the deficit in the power and production capacity of the region. It also highlights the decline in tax revenue and profits from distribution.
The proposal to withdraw during the meeting was the head of the local government of the Russian Republic in Karelia, adjacent to Finland in the northwest, and Penza Oblast, about 600 km southeast of Moscow.
Additionally, the federal government has decided to postpone the consideration of a yearly ban on Coinmint in the Russian Far Eastern Region, also known as Transbaikal, and Zabaikalsky Krai, the Republic of Biryatia, for two months.
The Russian government said it was “in favor of socially important consumers in energy-deficient areas” that “takes into account the need to assess the lost revenue of electric grid complexes.”
Russia is trying to move miners to the country’s energy-rich region
Despite the unwillingness to allow free circulation of Bitcoin and other such in the economy, the Russian Federation has made it somewhat tolerant of its recent attitude towards cryptocurrencies. For example, at the end of May, the Bank of Russia approved investment in crypto derivatives.
Mining became the first major crypto-related activity to be recognized as fully regulated after it was legalized last year. Miners can legally create digital coins as long as they register with the Federal Tax Services (FNS) and pay taxes.
But the constant expansion of crypto mining operations, both in industrial-scale Bitcoin farms and private basements and garages, has caused headaches for authorities in several corners of the country, such as Irkutsk Oblast, attracting miners with low power rates.
The Russian government is currently considering ways to seduce mining companies to move to areas with surplus energy and idling infrastructure, including providing fuel that cannot be sold to Europe due to Western sanctions in the war in Ukraine.
During the meeting, the Electric Power Industry Committee recommended:
“The Department of Energy and the Federal Anti-Monopoly Services, together with energy companies, must resolve economic incentives to attract mining burdens to surplus areas in terms of electricity and capacity.”
After first introducing only seasonal restrictions during peak power consumption during the cold winter months, around 12 Russian regions were permanently banned until mid-March 2031.
The affected areas include southern Irkutsk, the Republic of Dagestan in Russia, Ingschetteia, Kabardino Barkaria, Karacino-Mechesia, North Ossetia, Chechyya, and the occupied areas of the occupied Ukrainian territories of Donetsk, Luhans, Zapolizia, Zapolizia, and Herson.