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Russia Legalizes Mining of Cryptocurrency: How Should Miners Respond to the Changes?
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Summary: MEXC offers the highest financial returns on BTC across the market, along with a variety of trading and hedging products.
Recently, Russian President Putin signed a law that legalizes crypto mining in Russia. The news led to a surge in the crypto market. According to MEXC data, Bitcoin's price briefly rebounded past $60,000 on the same day, reaching a high of $62,700, with a daily increase of over 10%, reversing the downward trend.
Global regulatory attitudes towards the crypto industry are becoming more favorable, especially with several cryptocurrency ETF products being approved around the world this year. For crypto miners, choosing a high-quality trading platform is crucial.
As a leading global digital asset exchange, MEXC offers miners a range of high-quality services, from spot and futures contracts to financial products. Not only does MEXC provide the industry's lowest fees, but it also boasts the best liquidity and highest returns.
1. Russia Embraces Cryptocurrency, Mining Officially Legalized
According to TASS, on August 8, Russian President Vladimir Putin signed a law legalizing crypto mining in the country. The legal document has been published on the government website and will come into effect 10 days after publication.
The document states that only registered Russian legal entities and individual entrepreneurs are permitted to engage in mining. Small, individual miners can also mine cryptocurrency without officially registering if their energy consumption remains below a certain threshold. Foreign digital financial assets are allowed to be traded on Russian blockchain platforms; however, if the Central Bank of Russia deems these assets to pose a threat to Russia's financial stability, it reserves the right to ban the issuance of specific cryptocurrencies.
Crypto mining regulations will be jointly managed by the Central Bank of Russia, the Ministry of Finance, and specific Russian government departments, which will develop more precise regulatory requirements in the coming months. Additionally, Russian authorities are expected to implement measures to prevent the use of digital currencies for money laundering.
The recently introduced legalization of mining in Russia is not a sudden development. Contrarily, it has been anticipated for some time.
In 2020, Russia passed the "Digital Financial Assets Law", which for the first time legally recognized cryptocurrencies. In 2021, the Central Bank of Russia stated that it would allow cryptocurrency-related activities, including mining, to be conducted legally within Russia.
In 2022, President Putin noted that Russia has certain advantages in crypto mining, suggesting that mining should be taxed and regulated. He supported restricting mining activities to regions with surplus electricity, such as Irkutsk, Krasnoyarsk, and Karelia.
In December 2023, the Russian Ministry of Finance proposed a new bill seeking to legalize BTC mining and classify crypto mining as an export product. Both the Ministry of Finance and the Central Bank of Russia support recognizing crypto mining as an industry and endorse using cryptocurrency for foreign economic transactions within an experimental framework.
Earlier this year during an economic issues meeting, President Putin discussed the introduction and use of digital currencies with the government. He highlighted that this is a promising economic sector and emphasized that Russia must seize the opportunity to quickly establish a legal framework and regulations, develop infrastructure, and create conditions for the circulation of digital assets.
Today, Russia has finally introduced relevant regulations, legalizing crypto mining. This policy marks an important step forward in Russia’s approach to cryptocurrency regulation.
2. Why Is Russia Promoting the Legalization of Cryptocurrency Mining?
In fact, Russia's stance on cryptocurrency has been quite complex.
On one hand, the Russian government is concerned that cryptocurrencies might threaten the status of the ruble, leading people to switch to virtual currencies. On the other hand, the Russian government has also recognized the potential of cryptocurrency technology, particularly as the advantages of cryptocurrencies in cross-border transactions have become more pronounced after Russia was sanctioned by the West.
More importantly, the booming domestic crypto industry in Russia is also a significant factor in the government's change of attitude.
According to The Moscow Times, Russia has surpassed Kazakhstan to become the second-largest country in terms of Bitcoin mining power, accounting for 13% of the global Bitcoin mining power, just behind the United States.
The Russian Ministry of Finance estimates that starting in 2023, tax revenues from cryptocurrency trading and mining activities could reach 2.5 billion rubles (approximately 340 million USD) annually. This revenue provides Russia with a new financial source, which is particularly crucial in the context of international sanctions.
After weighing the pros and cons, Russia ultimately chose to legalize crypto mining. This policy has injected new momentum into the development of the Russian cryptocurrency industry, manifesting in several key areas:
1. Enhancing Russia's Position in the Global Cryptocurrency Market: Prior to this, due to the lack of a clear legal status, Russia's crypto industry had been relatively marginal. By legalizing crypto mining, Russia has demonstrated its commitment to the field, potentially attracting more investment and talent.
2. Providing Better Policy Support for Miners: Legalization means that the Russian government will offer supportive policies for miners, such as electricity supply and tax incentives, which will lower operational costs and improve overall profitability for miners. (Note: Russia's abundant energy resources and cold climate help reduce mining costs and increase efficiency.)
3. Stimulating the Development of Related Industry Chains: Beyond direct stakeholders, the legalization of crypto mining will also stimulate the development of related industries, such as mining equipment manufacturing, mining pool services, and electricity supply. This will inject new growth momentum into the Russian economy.
4. Strengthening Regulation of the Cryptocurrency Market: With a clear legal status, the Russian government will also enhance regulation of the crypto market, establishing relevant management measures to reduce risks such as money laundering and tax evasion, thereby ensuring the healthy development of the industry.
Of course, the implementation of this policy may face some challenges in the future, such as how to attract more high-quality miners. However, overall, the legalization of crypto mining undoubtedly brings new development opportunities to Russia.
3. How Should Miners Respond to a More Favorable Global Crypto Regulatory Environment?
For miners, regulation is a major reason for relocating. Outside of Russia, major countries have varying policies on crypto mining:
- China: Completely banned. In 2021, the Chinese government issued a ban that completely prohibits crypto trading and mining activities. This policy forced many miners to leave China, causing a significant drop in global computing power that year.
- South Korea: Restrictive. The South Korean government adopts a cautious stance on crypto mining, requiring miners to declare and obtain permission in advance. Additionally, South Korea has implemented power restriction policies to limit high-energy-consuming mining activities.
- Canada: Very friendly. The Canadian government is highly supportive of the crypto-mining industry, offering incentives such as electricity subsidies to miners. Canada has become one of the major mining hubs globally.
- United States: Relatively friendly. The U.S. government takes a relatively open stance on cryptocurrency. Although there are no clear federal regulations yet, several state governments, including Texas, actively encourage local mining development and offer various incentives. It is worth noting that the U.S. has the highest number of publicly listed mining companies globally.
- European Union: Developing regulations. The EU is working on the Markets in Crypto-Assets (MiCA) Regulation, which aims to establish a unified regulatory framework. This regulation will standardize crypto mining activities but generally supports the orderly development of the industry.
Countries exhibit significant differences in crypto regulation, leading to an uneven global distribution of mining operations. As regulatory frameworks continue to improve, they are expected to create a more favorable development environment for miners. Of course, aside from policies, another key concern for miners is profitability.
With Bitcoin having completed its fourth halving in April this year, the block reward has decreased from 6.25 to 3.125, resulting in a substantial reduction in miners' earnings. To make matters worse, Bitcoin’s computing power continues to increase, causing mining difficulty to rise as well—Bitcoin's current mining difficulty is 90.67 T, a historical high. Additionally, the price of Bitcoin did not experience the expected surge post-halving; instead, it has seen several significant corrections, even falling below the $50,000 mark.
A series of factors have compounded, putting miners' survival in jeopardy and bringing them to the brink of shutting down. Fortunately, Bitcoin recently rebounded to $60,000, temporarily easing the pressure on miners.
For miners, it is foreseeable that with multiple favorable factors driving the market, particularly the influx of funds from Bitcoin spot ETFs in the US, the price of BTC is expected to experience significant increases in the future. Therefore, holding onto Bitcoin as a HOLDer until its price rises is a viable option. Alternatively, miners can choose high-quality trading platforms for cryptocurrency management or hedge trading.
As a leading global digital asset exchange, MEXC provides a range of high-quality services for miners:
- Diverse Trading Products: MEXC supports a variety of trading options including BTC spot, BTC USDT-M futures, and Coin-M futures, catering to miners' daily trading needs. Additionally, MEXC offers BTC Savings with an annual yield of up to 1.8%, which is the highest among all centralized exchanges (CEXs).
- Industry's Lowest Fees: MEXC offers zero trading fees for spot trading and charges only a 0.01% fee for Taker orders in futures trading, which is currently the lowest in the industry.
- Stable Liquidity: The MEXC platform has more abundant liquidity, which can effectively respond to market volatility, providing miners with a stable trading environment and prices. Data shows that for spot BTC/USDT, the volume available at ±0.05% (5bps) from the mid-price reaches $11 million, ranking first among all exchanges. For USDT-M futures, the volume available at ±0.05% (5bps) reaches $39 million, leading globally and far exceeding competitors.
- Professional Customer Service: MEXC offers 24/7 comprehensive customer service to address any questions miners may have.
With its high-quality products, low fees, and professional services, MEXC has become the preferred trading platform for miners. Miners only need to open an account on MEXC to enjoy one-stop trading services, maximizing their profits.
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, consultation, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.