President Putin believes energy shortages are the reason for the gradual ban on cryptocurrency mining across Russia
Russian President Vladimir Putin has commented on the growing energy deficit that has arisen due to the rapid growth of digital currency production, as well as the gradual ban on cryptocurrency mining across the country.
Putin's comments on the matter come after a recent increase in electricity prices, which analysts say could impact the operations of bitcoin mining companies in the Russian Federation.
Putin Announces Ban on Mining in Russia: Governors Asked for It
Power shortages caused by a sharp increase in cryptocurrency mining were the main reason for Moscow's decision to ban the practice in a number of regions, Russian President Vladimir Putin explained at an event to discuss development initiatives.
The head of state cited by the Kremlin noted that local officials dealing with the issue are urging the federal government to take action as they face a shortage of energy supplies needed for various infrastructure and industrial projects.
Discussing the need to maintain a balanced approach to the use of Russia's resources at a plenary session of the forum “Strong Ideas for a New Time” organized by the Agency for Strategic Initiatives, Putin cited cryptocurrency mining as an example:
“We were recently happy that some regions had a surplus of electricity. But they started actively mining, and governors started complaining that they did not have enough electricity to develop their regions. We were forced to make certain decisions regarding mining.”
Local government concerns voiced by the Russian leader have already led to seasonal or permanent restrictions on cryptocurrency mining in many parts of the wider country.
A total ban until 2031 has been imposed in nearly a dozen territories, from Siberia to the North Caucasus and occupied Ukraine, although some regions have recently been spared as federal officials warned of a possible decline in tax and energy revenues.
High electricity tariffs also have a negative impact on Russian miners
Meanwhile, the cost of electricity has increased in Russia since July 1. According to the business information portal RBC, tariffs for electricity transmission across the all-Russian grid will increase by 11.5% by the end of 2025, and tariffs for local distribution companies will increase by 11.6%.
Electricity is probably the most significant expense for mining companies, as their equipment requires significant amounts of power. The latest generation of devices can consume around 2.5 megawatts per month, and industrial mining sites have thousands of these machines running at any given time.
According to Oleg Ogienko, a specialist in the field of blockchain, energy and digital finance, although most mining companies take into account the usual annual indexation of energy prices in advance, this year's growth exceeds the inflation rate and threatens to reduce the competitiveness of the Russian mining sector as a whole.
The analyst noted that both clients of Russian mining companies and investors, especially foreign ones, are already choosing other, more attractive jurisdictions, for example, the United States, where, according to him, a real mining boom is currently being observed.
Russia legalized cryptocurrency mining with a law signed by Vladimir Putin in August 2024. According to this law, legal entities and individuals can mine digital coins provided they register with the Federal Tax Service and pay taxes. Only about 30% of them have completed this procedure.
Low electricity rates and, in some cases, excess generating capacity have turned regions such as the Irkutsk region in Siberia into mining hubs in recent years. Government bans have been introduced in response to the resulting power shortages.
However, industry experts say the restrictions are mostly hurting legal mining. To address this, Russian authorities are considering alternatives, such as moving crypto farms to regions with high energy supplies, such as the North, while also cracking down on illegal mining activities across the country, especially in energy-starved regions.
Source: cryptonews.net
