Russia restricts crypto mining in energy-short regions

On October 30, Russia’s Deputy Energy Minister Evgeny Grabchak announced that the government will impose restrictions on cryptocurrency mining in regions facing electricity shortages. 

This decision comes amid concerns over limited energy capacities in certain areas, including far eastern, southwestern Siberia, and southern regions of the country. 

Grabchak emphasised the impact of energy constraints, stating, “If we say that mining is the forerunner of digitalization, then mining will soon be banned at the state level in some regions.” 

The announcement was made at the RBC tech forum, where Grabchak highlighted that resolving these electricity shortages in affected areas would not be possible until at least 2030. 

The restrictions follow new legislation signed by President Vladimir Putin, which regulates the circulation of cryptocurrency. 

The law, effective from November 1, grants the government authority to ban crypto-related mining activities in specific regions and outlines guidelines for implementing these restrictions. 

The new legislation also places limitations on advertising crypto-related services. 

Following this policy shift, Russia’s leading search engine, Yandex, adjusted its advertising guidelines in August 2024 to block ads related to crypto exchanges, blockchain services, crypto mining, smart contracts, and initial coin offerings (ICOs). 

Ads promoting earnings from these activities or services related to verifying crypto wallets and transactions for money laundering purposes were also prohibited. 

Additionally, there are ongoing discussions within the Russian Finance Ministry about imposing a tax on electricity consumption for crypto miners. 

While a final decision on the taxation policy has yet to be made, the consideration reflects the government’s increasing regulatory scrutiny over the crypto mining sector.