Brrr! Winter is coming, and Russia is turning down the heat on crypto mining to save some juice for the chilly months ahead. In an electrifying twist, Russian officials announced plans to hit the pause button on cryptocurrency mining across several regions this winter. It's all part of an effort to keep the lights on and the heaters humming when temperatures drop.
The freeze will affect regions like Irkutsk and parts of Buryatia and Zabaikalsky in Siberia, along with six North Caucasus areas, including Chechnya and Dagestan. And that's not all! The Russian-controlled Ukrainian territories of Donetsk, Luhansk, Zaporizhzhia, and Kherson will also feel the chill with a mining ban. In Siberia, miners will have to hang up their hats from December 1 to March 15, 2025, and expect annual hibernations from November 15 to March 15 until 2031. Meanwhile, the North Caucasus and some Ukrainian regions won't see the mining light of day year-round from December 2024 until March 2031.
This cool measure got the green light from a government commission led by Deputy Prime Minister Alexander Novak, aiming to keep the energy flowing where it’s needed most.
Russia has been making waves, emerging as the world's second-largest crypto mining hotspot, just behind the good ol' USA. With a whopping 16 billion kilowatt-hours of electricity being gobbled up annually for mining, that's about 1.5% of Russia's total energy consumption. Pretty impressive, but it's causing a bit of a power squeeze in places where winter isn't just coming; it's staying.
This move comes hot on the heels of Russia's new legal framework for crypto mining, which rolled out last month. Now, those dabbling in digital gold must register with the Federal Tax Service. Hobby miners can toil away up to 6,000 kWh per month without any strings attached, but anyone going overboard has to declare themselves as entrepreneurs.
The government’s also tidying up its crypto taxation policy, categorizing cryptocurrencies as property for tax purposes. Income from mining will be taxed at market value, but don't fret; miners can still deduct their expenses. And if you're wheeling and dealing in crypto, rejoice! Transactions are VAT-free.
While mining is on the up-and-up, trading crypto in Russia is still a no-go. Yet, despite the rules, crypto adoption is booming, fueled by the winds of war and escalating sanctions. DeFi is having its moment in Russia, with big institutional transfers lighting up the scene.
Meanwhile, Russian-born crypto services are stealing the spotlight, drawing in massive amounts of crypto from home and abroad. Chainalysis reports that while traffic to centralized exchanges has held steady, Russian-language sites with no KYC checks have seen a surge in action. Looks like the crypto winter won't be putting a damper on Russia's digital ambitions anytime soon!
