Russian electricity provider Rosseti reported losses of $14 million or approximately Rp228.62 billion (estimated exchange rate of Rp16,330 per USD) due to illegal crypto mining in 2024. The North Caucasus, Novosibirsk, and the Volga region were the most affected.
These mining farms have been found in warehouses, underground parking lots, and even makeshift containers on rented land. In one extreme case in Novosibirsk, 3,200 crypto mining rigs were discovered. They were stealing electricity on an industrial scale, resulting in losses of up to $2.1 million.
Tightening of Illegal Crypto Mining in Russia
Rosseti and law enforcement agencies have launched a major crackdown, resulting in more than 40 criminal cases and numerous arrests. Illegal crypto mining remains a major problem in Russia, as miners seek to avoid rising costs and energy restrictions.
With increasing government scrutiny and regulatory pressure, Russia may soon introduce much stricter controls on mining operations. especially as global Bitcoin adoption accelerates.
Unlicensed Crypto Mining Costs Huge Losses
Meanwhile, Russian electricity provider Rosseti reported losses of $14 million (1.3 billion rubles) due to illegal crypto mining in 2024. As previously explained, the North Caucasus, Novosibirsk, and the Volga Region were the hardest hit.
According to the TASS publication, authorities have identified 130 cases of mining operations without licenses and permits. This has overloaded the power grid and caused low voltage problems for residential areas.
Mining farms have been found in warehouses, underground parking lots, and even temporary containers on rented land. In one extreme case in the Novosibirsk region, 3,200 mining rigs were found stealing electricity on an industrial scale. That was at a cost of $2.1 million (197 million rubles).
Crypto Mining in Russia Officially Taxable
The Russian Federal Tax Service (FNS) announced on February 3 that individuals and businesses involved in digital asset mining can now report their income through their accounts.
The policy is based on Federal Law No. 259-FZ, which regulates the legality of crypto mining and its taxation system in Russia. Crypto miners are required to report the amount of digital currency they mine. That is no later than the 20th of the month in which the asset is generated.
The taxation is also progressive, with income up to USD 23,976 being taxed at a rate of 13%. While amounts above that are taxed at 15%. The government asserts that this system will increase transparency and compliance with tax regulations.
To access the reporting system, taxpayers must log in to their accounts with a qualified electronic signature. These accounts have been integrated into the FNS digital service, allowing individuals and businesses to manage their tax obligations efficiently.
Going forward, individual entrepreneurs and legal entities included in the Register of Miners and Operators will be required to report their mining results to the tax authorities. As stipulated in Decree No. 1464 which was passed by the Russian government on October 31, 2024.
Only Entities That Have Met Legal Requirements
In the illegal crypto mining policy, only individuals and entities that have met legal requirements are allowed to be listed on the list. The government also limits the involvement of certain groups in crypto mining.
It’s such as individuals who have been convicted of financial crimes. Entities listed on the anti-money laundering and anti-terrorism lists, and business entities that do not meet business integrity standards according to Federal Law No. 259-FZ.
As an additional measure, Russia has also imposed a ban on crypto mining in several regions. In November 2024, the government banned this activity in several areas. including parts of Ukraine that have been seized by Russia.
This ban will come into effect in December 2024 and will be in place until March 2031. on the grounds of addressing the electricity supply shortage in the region.
Russian Electricity Provider Launches Crypto Mining
Previously, Russia’s largest energy provider, Rosseti, revealed that it would launch a crypto mining operation. This move allows electricity supply centers in Russia to cooperate with Bitcoin mining companies.
A report by Russia’s state-run news agency TASS said Rosseti is ready to position itself as an operator. Of course to host crypto mining infrastructure.
The move also marks a major shift for Rosseti, which has spent the past few years going after illegal crypto mining.