Russia set to ban crypto mining in Moscow, prosecute illegal miners

Russian authorities are preparing to ban crypto mining in the capital city, the adjacent Moscow Oblast and parts of the Kursk region for the next six years.

The news follows reports that mining may be restricted in the whole of Central Russia and comes alongside the adoption of stiff penalties for illegal miners.

Russian government mulls mining ban in Moscow

A Russian government commission responsible for the electric power industry has recommended banning cryptocurrency mining in more of the country’s regions.

The planned full prohibition is expected to cover the city of Moscow, the Moscow Oblast which surrounds it, as well as some areas in the Kursk region, media reports unveiled.

Speaking to the official TASS news agency, Russia’s Deputy Energy Minister Evgeniy Grabchak highlighted that the proposed ban may remain in place until at least 2032.

The issue has been raised by local officials, his department announced at the end of last month, adding it will be resolved by taking into account their positions on the matter, as reported by RBC.

Moscow Oblast’s Energy Minister Sergey Voropanov had previously stated that crypto mining did not benefit the local economy, while the ban had already had a positive effect in other regions.

The region’s governor, Andrey Vorobyov, and Moscow Mayor Sergey Sobyanin both proposed introducing restrictions on mining, the crypto news outlet Bits.media recalled in a post.

At least 65 data processing centers with a total capacity of 734 MW are connected to the grid in the two territories, according to data from the Russian energy ministry.

Kursk Governor Alexander Khinshtein suggested similar measures in eight districts and the city of Lgov, pointing to the oblast’s power supply problems exacerbated by the war in neighboring Ukraine.

His administration claims the mining ban will increase the region’s reserve capacities and save electricity for other consumers, including in both residential and industrial areas.

Mining may be banned in the rest of Central Russia

According to a recent article by the business daily Kommersant, the Russian government is considering banning crypto mining in a total of 19 regions served by Moscow’s power distribution network.

If that happens, the crypto activity will be curbed throughout the Central Federal District, which is the economic heart of the vast nation.

The country legalized mining in 2024, hoping to monetize its competitive advantages in terms of abundant energy resources and cool climatic conditions.

However, the high concentration of mining enterprises in certain areas with low electricity rates resulted in energy deficits.

To deal with power shortages, last year local and federal Russian authorities banned the minting of digital currency in 13 regions until spring 2031.

Affected territories include the Siberian regions of Irkutsk Oblast, Republic of Buryatia, and Zabaykalsky Krai, most Russian republics in the North Caucasus and four occupied Ukrainian oblasts.

Russia to send illegal crypto miners to prison

Meanwhile, the State Duma moved to criminalize illegal mining in Russia. On Wednesday, the lower house of parliament in Moscow passed the respective bill on first reading.

The legislation introduces tough penalties for those engaged in such activities without registration or using stolen energy, including fines, forced labor and imprisonment.

The punishment will depend on the size of the damage and the severity of the violation in each case, the news agencies RIA Novosti and Prime reported.

The operators of a mining facility working outside the law, which generates significant income or causes large financial losses, would face fines that can reach 2.5 million rubles ($35,000).

Prison sentences of up to five years, forced labor and additional fines await miners doing illegal business as members of an organized crime group.

What’s more, the authorities will be able to confiscate the property of such individuals and entities. At the same time, compensating for damages may exempt a guilty person from criminal prosecution.

Both individual entrepreneurs and companies are allowed to mine cryptocurrency in Russia, which is still one of the world’s top Bitcoin mining destinations, provided they register with the state and pay taxes.

However, less than 1,500 out of an estimated 50,000 crypto mining businesses in Russia have done so until now, according to the explanatory note to the draft law.

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