It appears that the Russian state intends to push most crypto miners into the shadows, with the ultimate goal of extracting their profits through appropriate taxation.
Moscow’s Ministry of Finance has already added well over 1,000 mining companies to a special register of companies engaged in profitable operations in which Russia is a major player.
Russian government aims for mining profits
Russia’s Ministry of Finance (Minfin) has set out to identify most of the vast country’s crypto mining companies to find out who is minting Bitcoin and what they are getting from it.
The industry has continued to grow, especially since legalization last year, turning Russia into a leading mining hotspot. But not all mining companies report to the state and pay taxes.
Anton Siluanov, head of the Russian Ministry of Finance, revealed in a plenary session of the State Duma that his ministry is currently replenishing its database for cryptocurrency miners.
As reported by TASS news agency and Russian cryptocurrency news agency Bits.media, the finance minister elaborated:
“In fact, we have already started creating a register of miners and 1,364 people are already registered.”
Siluanov stressed that Minfin is determined to tax the mining sector, which largely operates in a shadow economy, with many “gray” miners evading registration and taxation.
Russia has been tempted to take advantage of its competitive advantages in the coin minting business, including abundant and cheap energy, power generation capacity that has not been used since Soviet times, and cool climatic conditions in many parts of its vast territory.
Mining became the first comprehensively regulated cryptocurrency-related economic activity to be legalized in the Russian Federation in 2024.
The adopted law allows both legal entities and individual entrepreneurs to mine digital currencies, as long as they register with the Federal Tax Service (FNS) and pay taxes.
Russia has not yet registered all crypto mining companies
A year later, Moscow authorities admitted that less than a third of all industry participants had been added to the FNS register.
The numbers could be even worse when it comes to registration requirements for imported mining equipment, with some proposals to grant amnesty to encourage compliance.
Added to that is the problem of “black” miners, those who illegally connect to the grid and mine using stolen electricity, often using existing infrastructure on abandoned industrial or agricultural land.
Such illegal cryptocurrency farms are proliferating across Eurasia, with Russia’s republics in the North Caucasus and some Siberian regions leading the way.
Another group of “amateur” cryptocurrency miners, who mint digital coins in their homes, basements, or garages, do not need to register at all if they keep their monthly electricity consumption below 6,000 kWh.
All these categories are contributing to the growing energy shortage in some regions of the country, forcing local authorities in about a dozen regions of Russia to introduce seasonal or permanent restrictions, and in some cases impose six-year bans, with approval from the federal government.
Cryptopolitan reported earlier this month that Russia’s state budget loses more than $120 million annually to uncollected taxes from illegal or unregistered crypto farms, according to recent estimates.
Moscow aims to tax crypto payments too
Anton Siluanov reminded that the Ministry of Finance and the Central Bank of Russia recently agreed to legalize virtual currency transactions in foreign trade and allow their use in cross-border payments beyond the currently existing “experimental legal regime”.
The next bill to amend the law, which will be jointly drafted by financial regulators, will also regulate virtual currency trading and the operation of virtual currency exchanges.
“Therefore, the area will be legalized and will have a legal basis and will be able to collect taxes accordingly from these settlements, just like any other financial asset,” Chief Minfin elaborated.
“I think we need to move in this direction as soon as possible. This will be beneficial for everyone, both those involved in international payments and cross-border payments, and those who use cryptocurrencies as a source of payments and savings,” the Russian Finance Minister added.