Russian Authorities Draft Crypto Mining Law, But There’s a Catch (Report)

The Bank of Russia and the Ministry of Finance of the Russian Federation (MiFin) have agreed that crypto mining should be allowed only in certain areas.

According to a new report by RBC-Crypto, Russian officials are preparing to legalize mining activity only in energy-rich regions and aim to ban the niche in energy-scarce ones. The legislation should be adopted by the end of this year.

Energy-Extensive Areas Only

Reiterating the authorities’ stance, Chairman of the parliamentary Financial Market Committee Anatoly Aksakov said the energy-intensive process should be prohibited in areas facing power shortages. The deputy also revealed that the law is set to be presented before the State Duma.

The development follows a proposal by the Ministry of Economic Development that sought to allow crypto mining in areas with a stable power supply.

According to Roman Nekrasov, co-founder of the ENCRY Foundation, mining activities will be allowed in regions with hydroelectric and nuclear power plants. Irkutsk Oblast and Krasnoyarsk Krai are known to have hydroelectric power plants, whereas Tver, Saratov, Smolensk, and Leningrad host nuclear power plants. These areas have already been actively populated by mining farms for several years now.

Historically energy-deficient regions such as the capital Moscow and the adjacent Moscow Oblast, Belgorod Oblast, and Krasnodar Krai will not accommodate mining activities.

Meanwhile, the expert also asserted that cryptocurrency mining could be allowed in Karelia by the Russian authorities. However, this would happen under special conditions that would require mining farms to support the construction of small hydropower plants.

Curtailing Illegal Mining Activities

Despite being the third-biggest crypto mining nation in the world, according to Cambridge University data, Russia proposed a blanket ban on the use and creation of all cryptocurrencies domestically. The renewed push comes after several mixed signals and contrasting stances from Russian authorities as it fights against international trade sanctions.

Rising unemployment cases have prompted to resort to underground crypto mining in the country. But the focus on eliminating illegal mining activities will continue. Nekrasov, for one, expects the crackdown on mining facilities in Dagestan to amplify. Earlier this year, Officers from the Ministry of Internal Affairs of Dagestan and the Federal Security Service closed down two illegal crypto farms and seized more than 1,500 mining machines.

CryptoPotato earlier reported that Russia is set to launch its native CBDC in a bid to dampen the US hegemony over the global financial system.