The crypto page of Russian business news portal RBC stated in an article that despite the recent market downturn, mining cryptocurrency continues to grow in Russia. This vast country, which was ranked fifth among the top five mining destinations at the start of the year, has abundant energy resources and is in a favorable climatic environment.
Recent reports also showed that electricity consumption to power Russian mining farms has risen nearly 20 times over the last five years. The amount of energy used in crypto mining is comparable to the energy required in the country’s agriculture sector, with 1.25 gigawatts being burned in 2013 for its production ( Bitcoin).
However, the grey economy of Russia still allows for the extraction of digital currency due to the lack of regulation. Although two separate bills were created to legalize the mining industry, they still need approval from the government before lawmakers can consider them.
In April of this year, the New People party filed the first draft law in the State Duma. This is the lower house in parliament. After a negative evaluation by the house’s legal department, the draft law was pulled. Following a negative assessment by the legal department of the house, the liberal faction submitted an amended version that was rejected.
The executive power also created another piece of legislation. Alexander Sharapov (a lawyer at KSK Group Consulting firm), said that this bill has greater chances because it was prepared with the assistance of the Ministry of Finance. The Central Bank of Russia (CBR), however, opposes legalization of crypto-related activities as suggested by the party. also proposes a blanket ban on crypto, the legal expert said.
Efim Kazantsev from Moscow Digital School, explained that the main reason a mining law is not yet adopted is because different Russian authorities don’t have a united position on the matter. He said that it might take some time to develop a set of rules that suits all government bodies. However, he noted that President Vladimir Putin had earlier this year urged both the CBR (the government) and the government to come to a consensus on crypto regulations. While highlighting Russia’s competitive advantage as a mining destination.
Kazantsev believes that the best scenario is to adopt a comprehensive bill, such as the Finance Ministry’s draft legislation ‘On Digital Currency. It is not a good idea to have separate laws that are only focused on mining. It is essential to regulate both the mining and circulation of cryptocurrency. He said that there are many issues that have been raised and need to be resolved.
Modifications to the upcoming legislation may be required in light of a changing environment for miners
In light of changing business conditions, the authors of mining legislation might also need to revise their proposals. Yuri Brisov is the founder of LFCS Legal Support. He claims that the New People party’s bill does not account for the new conditions faced by miners as a result of sanctions imposed on Ukraine. Large mining companies like Bitriver have already been affected by the penalties. He believes that tax incentives should be provided for this sector by lawmakers.
According to Daniil Gorkov of Criminal Defense Firm, the lack of a legal definition of cryptocurrency is still a major problem. This is why mining isn’t yet regulated, he says. Although the law on “Digital Financial Assets,” which was enacted in January 2021, does not mention cryptocurrency, some officials indicate that it includes cryptocurrency in a broader sense. However, the law primarily refers only to tokens and digital coins with a specific issuer, like a legal entity.