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The Kremlin wants to legalize bitcoin mining in Russia

 


The power consumption of the Russian bitcoin mining industry now surpasses that of the agricultural sector in the country. This was stated by the Deputy Minister of Industry and Trade in the course of a blockchain panel discussion of the ruling party United Russia . His statement gives further impetus to efforts to legally regulate mining in Russia.


Because the state news agency Interfax reported on May 27 that Wasili Shpak combined his statement with the demand to get the mining of Bitcoin and Co. out of the legal “grey area”:


We cannot avoid recognizing mining as an industrial activity or branch of the economy in this sense.


According to the deputy industry minister. Currently, mining in Russia is neither forbidden nor allowed. According to Schpak, this results in risks for the companies involved. Russia ended up third in the global Bitcoin hash rate last year after the Chinese mining ban. Recently published figures from the University of Cambridgehowever, observed a Chinese comeback in January 2022 – and a drop in Russia to fifth place, behind Canada. Whether Schpack's statement suggests that his country has claimed more than 4.66 percent of the BTC hash rate since January cannot be verified. However, the politician explained that a trend towards cryptocurrencies that require less energy than the top dog Bitcoin can be expected in the future. He added:


Still, it is obvious that [mining] is a data processing that consumes energy in one way or another and it is a technological activity. Our position here is very clear: mining must be recognised, regulated and integrated into industrial activities.


According to Interfax , Russia's Prime Minister Mikhail Mishustin made a favorable statement about mining back in April. The prospecting of cryptocurrencies is therefore suitable for boosting investments in data centers and comparable infrastructures.

In fact, Russia is planning to pass a law that will guarantee legal security for mining. Deputies of the State Duma submitted a corresponding application by April 29. The latest draft from May 20 moves away from the original idea of ​​a special register for mining companies.


A one-year tax exemption for newly registered companies is also to be abolished, as it could have a negative impact on the state budget. Instead, the same registration process is now being planned for miners as for all other companies.


The Kremlin's new crypto course

Both the initiative for a mining law and the positive statements made by Mishustin and Shpak must be viewed in the context of Russia's war of aggression against Ukraine and the associated Western sanctions. In the course of increasing economic isolation, the Kremlin is apparently thinking more about Bitcoin and Co. As recently as January, the country’s central bank called for an almost comprehensive crypto ban, which would also have put an end to mining in Russia.


In contrast, Moscow is now planning its own crypto law. The once unthinkable acceptance of Bitcoin and Co. as a means of payment is also being discussed among high-ranking officials. On May 31, even the Central Bank of Russia stated that it would not fundamentally oppose crypto payments for international transactions.


It remains to be seen to what extent Russia will continue to penetrate the crypto space in the future.

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