Today (24th), the Russian government announced that starting from January 1, 2025, 10 regions will ban cryptocurrency mining, and the ban will last until March 15, 2031, with the main purpose of balancing energy consumption and industrial demand.
Prohibited Mining Areas and Scope
According to the Russian Cabinet's resolution, the areas where digital currency mining is prohibited include: Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, Chechnya, Donetsk, Luhansk, Zaporizhzhia and Kherson regions.
In addition, parts of the Irkutsk region, the Republic of Buryatia and the Trans-Baikal region will temporarily restrict mining activities during the peak energy consumption period (from November each year to March of the following year).
Further Reading: Why Russia Legalizes Bitcoin Mining, What's Putin's Crypto Ambition Behind It?
Considerations Behind the Policy
The Russian Cabinet stated that the policy will be adjusted by the government's Electric Power Industry Development Committee based on actual conditions. The main purpose is to address local energy shortages, while considering power distribution and industrial demand.
Experts analyze that the restriction on mining is closely related to the electricity subsidy policy in some regions of Russia. Sergey Kolobanov, Deputy Director of the Fuel and Energy Sector of the Center for Economic Development, pointed out that the current "inter-regional cross-subsidization" system has led to some regions' low electricity prices being borne by users in other regions, which has affected the national energy equity.
Professor Klimanov of the IPEI Regional Policy Center at the Presidential Academy stated that this measure will improve the imbalance in electricity tariff payments in Russia and increase the economic fairness between different regions. "Traditionally, residents and enterprises in central Russia have to subsidize the low electricity prices in the North Caucasus and the Far East, which has led to inequality," he said, adding that the new policy is expected to bring more stability and equality to the local economy.
Relevant Regulations
Since November, Russia has legalized cryptocurrency mining activities, but they must comply with the regulations of the Federal Tax Service (FTS) and submit detailed information on assets and wallet addresses. Individual miners are limited to a monthly electricity consumption of no more than 6,000 kWh for mining, in order to reduce the pressure on the Russian power grid.
