The Russian government has announced a six-year prohibition on cryptocurrency mining in ten regions, effective from January 1, 2025, to March 15, 2031. This decision, reported by Tass, aims to address the substantial energy consumption associated with crypto mining activities. The ban encompasses participation in mining pools and includes provisions for temporary restrictions in other areas during peak energy demand periods. The affected regions include Dagestan, North Ossetia, and Chechnya, with the possibility of adjustments based on assessments by a government commission monitoring energy demand fluctuations.

In July 2024, Russia legalized cryptocurrency mining, with the legislation coming into effect in November 2024. Despite this legalization, the use of cryptocurrencies as legal tender for domestic payments remains prohibited. However, Russia permits cross-border cryptocurrency transactions, a move interpreted as an effort to circumvent international sanctions imposed following its invasion of Ukraine.

The energy-intensive nature of cryptocurrency mining has been a significant concern globally. In Russia, mining operations consume approximately 16 billion kilowatt-hours annually, accounting for about 1.5% of the nation’s total electricity usage. This substantial consumption poses challenges, particularly in regions with harsh climates and limited energy infrastructure. The government’s decision to implement the ban during winter months in specific Siberian regions, such as those near Lake Baikal, is intended to prevent power shortages during periods of high energy demand.

Russia’s stance on cryptocurrency has evolved over time. While the country has moved to regulate and tax cryptocurrency mining—anticipating annual revenues up to 200 billion roubles (approximately $2 billion)—it maintains strict controls over the use of digital currencies within its borders. The prohibition of domestic cryptocurrency payments aligns with the government’s cautious approach, aiming to mitigate financial risks and maintain monetary stability.

This recent ban reflects the Russian government’s ongoing efforts to balance the economic benefits of cryptocurrency mining with the imperative to manage energy consumption and ensure the stability of regional power supplies. By imposing these restrictions, Russia joins other nations in addressing the environmental and infrastructural challenges posed by the rapidly expanding cryptocurrency industry.

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