Russia To Ban Crypto Mining in Occupied Ukraine To Ease Power Shortages

Key Takeaways

• Russia plans a crypto mining ban in several regions, including parts of Siberia and occupied Ukraine.
• Mining restrictions aim to address electricity shortages during winter peaks.
• Amendments to crypto laws empower the government to enforce regional mining bans.

Amid mounting energy concerns in the winter, Russia is preparing to impose a temporary ban on crypto mining across several regions, including occupied territories in Ukraine.

Deputy Prime Minister Alexander Novak convened the government commission on electric power development on Tuesday, Nov. 19, to discuss the escalating power crisis and the impact of crypto mining on regional electricity supplies.

Russia to Temporarily Ban Winter Crypto Mining 

According to reports in Russian media, the government aims to curb mining activities in energy-strained areas like the Irkutsk region and parts of the Republic of Buryatia and Zabaikalsky region in Siberia.

Restrictions will also extend to the North Caucasus regions, including Chechnya and Dagestan, as well as occupied territories in Ukraine, such as Donetsk, Luhansk, Zaporizhzhia, and Kherson.

For Siberian regions, mining will be prohibited from Dec. 1, 2024, to March 15, 2025, and annually from Nov. 15 to March 15 through 2031. However, in the North Caucasus and occupied Ukrainian regions, mining bans will remain in effect year-round starting December 2024.

Local governments, particularly in Siberia and Dagestan, have flagged electricity shortages exacerbated by crypto-mining operations. Chechnya called for a mining ban earlier this year, citing power imbalances and strain on the grid.

Legal Framework for Crypto Mining Bans

Russia’s parliament recently amended its crypto-mining laws to grant the government the authority to impose targeted restrictions.

These changes distinguish between enterprise-grade and individual-grade mining, requiring businesses to register with tax authorities and adhere to energy consumption limits.

Individual miners are exempt from registration but must stay within set electricity thresholds or risk being classified as enterprise miners.

These measures reflect Moscow’s broader strategy to moderate energy use while preserving the legal framework established earlier this year, which legalized crypto mining and trading for cross-border transactions.

Lessons from Iran

Russia’s latest crackdown echoes Iran’s struggles with crypto mining.

Faced with severe power outages due to unregulated mining, Iran temporarily banned mining activities starting in 2021.

Yet, the measures have done little to address illegal mining operations, which continue to strain the country’s electricity infrastructure.

Unlike Iran, however, Russia is proactively boosting energy production to meet demand. The government plans to revive a Soviet-era power plant to support crypto-mining operations.

Russia’s Role in Global Bitcoin Mining

Despite these restrictions, Russia remains a dominant force in Bitcoin mining, ranking second globally after the United States.

The country has seen its mining industry flourish even in the absence of comprehensive regulations.

Earlier this year, President Vladimir Putin signed a landmark crypto bill into law, legalizing cross-border crypto use and opening the door to regulated mining practices.

As winter approaches, the new restrictions underscore the government’s challenge: balancing its ambitions as a global crypto mining hub with the need to address domestic energy concerns.