Following the formal legalization of cryptocurrency mining, Russia is preparing to further tighten regulations and impose severe criminal penalties on unregistered Bitcoin (BTC) mining activities. The Russian Ministry of Justice recently released a draft amendment to the Criminal Code, proposing to reclassify several illegal cryptocurrency mining activities from administrative violations to criminal offenses. Unregistered Bitcoin miners could face up to two years of forced labor or even imprisonment, along with fines ranging from 500,000 to 1.5 million rubles.
Only 30% of Bitcoin miners in Russia are registered and have not declared their rights in accordance with the law.
The background to this proposed amendment stems from Russia's formal establishment of a regulatory framework for cryptocurrency mining in 2024. At that time, Russian President Putin signed the relevant bill in the summer, legally recognizing mining activities and hoping to bring this long-standing gray-area industry under regulation, taxation, and energy management. However, official statistics show that the actual implementation still falls significantly short of the policy's original intent.
In June, Russian Deputy Finance Minister Ivan Chebeskov pointed out that only about 30% of miners had registered with the Federal Tax Service, with the majority of the remaining operators continuing to operate in what is known as a "gray area" without legally declaring their activities. Authorities believe that this widespread non-compliance not only weakens the tax base but also puts long-term pressure on the power system and local infrastructure.
The Russian Ministry of Justice sent out heavy fines and forced labor penalties.
According to the draft amendment published by the Ministry of Justice, individuals who engage in mining activities without completing the required registration may face fines of 500,000 to 1.5 million rubles, or up to two years of forced labor. In less serious cases, the court may also impose a maximum of 480 hours of forced labor as an alternative penalty.
For large-scale, organized mining operations or miners generating substantial or even exceptionally large profits, penalties will be further escalated. The draft stipulates that such activities could be punished with a fine of up to 2.5 million rubles, forced labor for up to five years, or even imprisonment for the same amount. Furthermore, confiscation of mining equipment and other property sanctions will remain among the enforcement measures.
Under current regulations, Russia employs a tiered management system for miners. Individual miners with monthly electricity consumption below 6,000 kilowatt-hours are considered private users and can mine without prior registration, but are still required to declare and pay personal income tax on the cryptocurrency they mine. In contrast, commercial mining farms and related infrastructure operators must complete official registration, submit regular production reports, and comply with regional restrictions set by local governments based on electricity load or energy security.
However, law enforcement agencies admit that cracking down on illegal mining remains extremely difficult in practice. Many unregistered mining farms are involved in electricity theft or are located in areas where mining is prohibited, placing a long-term and hidden burden on local power grids. In some areas, illegal mining has even led to unstable power supplies, forcing the implementation of temporary mining bans during peak winter electricity consumption periods.
Illegal Bitcoin mining consumes a large amount of electricity, impacting residential electricity consumption.
Official estimates suggest that illegal mining activities consume billions of kilowatt-hours of electricity annually, significantly impacting energy dispatch and residential electricity consumption. In the past, Russia has attempted to curb the chaos through fines of up to 2 million rubles, equipment confiscation, and surprise inspections, but with limited success. Enforcement actions have even extended to power companies, resulting in the arrest of several employees suspected of assisting illegal mining and the closure of large underground mines.
The proposed amendments to the criminal code by the Ministry of Justice indicate that the Russian government intends to force miners to fully comply with regulations by increasing legal risks. The draft was officially published on December 30th and has entered the public consultation phase. Whether these stringent laws will effectively change the long-standing gray area of the mining industry remains to be seen.
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The Central Bank of Russia has allowed retail investors to purchase Bitcoin, with a limit of $3,800.
This article, titled "Russia Tightens Cryptocurrency Regulation, Unregistered Bitcoin Miners Face Criminal Liability and Heavy Fines," first appeared on ABMedia, a ABMedia .
