Russian authorities plan to ban cryptocurrency mining in occupied territory of Ukraine and have taken new regulatory measures as the conflict exceeds 1,000 days.
Russia’s Deputy Prime Minister Alexander Novak has convened a meeting with senior officials to address the country’s power supply shortages during the fall and winter peak seasons. We specifically focused on the energy challenges posed by cryptocurrency mining in areas with limited power capacity.
Russia’s cryptocurrency mining restrictions could last until 2031
According to a report in the Moscow Times, the proposed ban would apply to Russian-controlled territories, including Donetsk, Lugansk, Zaporizhia and Kherson. The government aims to curb mining activity in the region, citing its impact on the local power grid.
Mining will be completely banned in the North Caucasus and occupied areas of Ukraine from December 2024.
Additionally, cryptocurrency mining in Siberia will be suspended from December 1 to March 15, 2025. Similar restrictions will apply from November 15 to March 15 each year until 2031.
“Starting in December 2024, the Russian Ministry of Energy has been cracking down on mining equipment in regions with severe energy stress, including Irkutsk, Chechnya, and the DPR. The point is clear. Energy ≠ infinite and miners may have to move or pivot stealthily.” Maria Nawfal wrote on X (formerly Twitter).
Putin’s government has been considering several changes to Russia’s cryptocurrency regulations over the past few months. While the new law allows for direct regulation of mining pools, support for using cryptocurrencies as a means of payment remains strong.
Last week, the government revised its cryptocurrency taxation policy. Under the new rules, cryptocurrencies will be classified as property for tax purposes. Income from mining is taxed based on market value at the time of receipt.
However, miners can also deduct costs incurred during their operations, easing financial pressure on the industry. Cryptocurrency transactions are exempt from value added tax (VAT).
Instead, the profits are taxed under the same system as securities. This limits personal income tax on cryptocurrency-related income to 15%.
Additionally, according to reports, Russia is moving forward with plans to establish a national cryptocurrency exchange. These exchanges are likely to be based in St. Petersburg and Moscow.
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