Regional Bans on Crypto Mining: A Timeline
The Russian government has unveiled a draft resolution that will see the imposition of regional bans on cryptocurrency mining from Jan. 1, 2025. The restrictions will run until Mar. 15, 2031, and will mainly hit the energy-strained areas, it said. According to TASS, mining and pool participation will be banned in Dagestan, Ingushetia, Chechnya, Kabardino-Balkaria, and North Ossetia. Meanwhile, Irkutsk, Buryatia, and Zabaikalsky Krai will face temporary seasonal restrictions from Nov. 15 to Mar. 15 in subsequent years.
Energy Crisis and Subsidized Regions
The mining ban addresses critical energy shortages exacerbated by subsidized electricity prices in regions like Irkutsk, where rates can be as low as $0.01 per kWh. These low rates have attracted crypto miners, causing grid overloads during winter months. Authorities argue that the uneven distribution of power consumption, largely caused by these subsidized prices, has strained resources. This will inevitably ease pressure on the energy system and distribute electricity more equitably across various industries.
Expert Views on Policy Implications
Among the energy experts, Sergey Kolobanov from the Center for Strategic Research, holds the view that the ban on mining fits into larger national policies on energy. To quote Kolobanov, removal of the interregional cross-subsidization – that cheap electricity in some regions must be subsidized by others – was one of the critical factors towards privatising Russia’s power infrastructure. These assertions are supported by the World Energy Outlook 2023, underpinning a 5.8% increase in electricity consumption in industrial regions by mid-2023, against the decline in overall power generation due to sanctions and weakening industrial demand.
Tax Measures and Future Frameworks
Russia has also imposed a 15% tax on the profits from Bitcoin mining from November 2023, raising the bar of scrutiny of the industry. The Cabinet of Ministers said this list of restricted zones may be reviewed based on the commission’s recommendations on electricity. These are seen by the policymakers as essential to addressing the thorny concerns on energy equity, and hence an enabling environment for long-term reforms entailing power sector privatization.
By setting these limits, Russia seeks to balance electrical consumption, reduce regional energy imbalances, and head toward a more sustainable and privatized energy framework. The policies reflect a strategic approach to managing limited resources amid increasing demand and infrastructural challenges.
