Russia has implemented a six-year ban on cryptocurrency mining in 10 regions, citing the sector’s high energy consumption, according to a report by state news agency Tass.
Details of the Ban
The ban begins on January 1, 2025, and will remain in place until March 15, 2031. The restrictions cover direct crypto mining activities, participation in mining pools, and temporary limitations in other regions during peak energy demand. The ban targets regions like Dagestan, North Ossetia, and Chechnya, though the list could change based on energy demand assessments by a government commission.
Background on Crypto Regulation in Russia
Russia officially legalized cryptocurrency mining in July 2024, with the law taking effect the following month. While cryptocurrencies are prohibited as legal tender for domestic transactions, the government permits cross-border payments in crypto to help evade Western sanctions following its invasion of Ukraine.
The latest move highlights a tension between encouraging mining as an economic activity and managing its strain on local energy grids, particularly in regions where inter-regional subsidies make electricity cheaper.
Energy Concerns Drive Restrictions
The decision reflects growing concerns over the industry’s impact on power consumption in regions with already strained electricity supplies.
The government has indicated that the ban will remain flexible. A specialized commission will assess regional energy demands and adjust the list of affected areas as needed.
Implications for the Crypto Industry
The ban underscores the challenges faced by the crypto mining industry in navigating regulatory frameworks and energy policies globally. While Russia’s move to legalize mining earlier this year was seen as a step toward embracing the sector, this recent ban highlights the complexities of balancing energy use and economic growth.
The imposition of restrictions could push mining operations to relocate to other regions within Russia or neighboring countries with more favorable energy policies.
