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Russian Ministry Planning on Bitcoin Mining Legalization in Select Areas

The ministry of Economic Development believes bitcoin mining should be allowed in more energy abundant areas, Vladimir Putin echoed similar sentiments.

bitcoin-mining
Photo by Graf Vision

The Russian Ministry of Economic Development introduced a proposal quite recently to explicitly legalize and tax Bitcoin mining in regions consisting of a surplus in electricity. According to the said proposal, Bitcoin Mining, which exists in what is considered to be a bit of a legally grey area, shall be recognized as a form of “commercial activity” and taxed once the coins are converted into rubles.

As seen from a report by local news agency Izvestia on Tuesday, this proposal has been designed in a manner that the country can benefit from mining, all the while not having its electrical grids be overwhelmed in vulnerable areas. This is in fact an issue usually faced by other countries including but not limited to Iran and Kazakhstan. This goal is to be accomplished by the confinement of mining to reliable grids as well as setting electricity-use limits on individual miners, according to what the ministry said.

The ministry also aims to introduce lower electricity rates and tariffs for Bitcoin mining farms in some areas in order to incentivize industry growth. Once a certain energy threshold has been passed, it’ll raise the energy prices for miners. The limit has not been determined as of yet.

The head of the liquid cooling technology provider titled Comino, Evgeny Vlasov told Izvestia about his belief that mining shall be allowed by everyone in Russia, and he deemed it a wise investment in the tech sector. The President of Russia, Vladimir Putin, has also echoed a similar sentiment, recognizing that mining has the economic benefit which it could bring to the country, given its “surplus of electricity” and “well-trained personnel.”

While the President may be on board, Russia’s Central Bank doesn’t seem to think it’s a good idea at all, given the fact that it’s pushed to have Bitcoin and other cryptocurrencies be banned, stating financial system and volatility concerns as potential risks. All that said, though, recent negotiations between the National Government and the Bank of Russia have left regulation a likelier outcome.

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