Legalizing industrial mining will help Russia overtake the US: experts

As reported on his personal Telegram channel Founder and CEO of BitRiver Igor RunetsThe introduction of mining into the legal framework will create jobs, provide 50 billion rubles in taxes to the budget from 2026, create financial liquidity for foreign economic activity and reduce the cost of electricity, as data centers for energy-intensive computing will be created, and the country will be able to participate more effectively in the electricity demand management program.

The regulation will reduce imbalances in the energy system and significantly reduce energy shortages in a number of regions of the Russian Federation, which arose due to the uncontrolled growth of “gray” mining, Runets believes. In addition, the introduction of mining into the legal framework will reduce the current gap with the United States in the volume of industrial mining and will allow Russia to overtake its main competitor in these indicators.

Vladimir Kovalev, Founder and Managing Partner of Kovalev and Partners LLC He says that while the mining industry in Russia is “in the shadows”, there are difficulties with controlling market players and the ability to resort to courts to protect violated rights.

“According to the innovations, all professional miners will be included in a special register, but this only applies to legal entities and individual entrepreneurs. For individuals engaged in mining, limits on energy consumption will be set, and if these rules are observed, citizens will not be included in the register. All mined cryptocurrencies can only be disposed of using Russian infrastructure, and information about digital assets must be transferred to the financial regulator,” Kovalev said.

The law will help control all cryptocurrency transactions and fight new scammers, the expert believes.

“The current version of the document provides for a ban on organizing the circulation of digital currency in Russia, with the exception of its mining. Therefore, we can assume that cryptocurrency exchange platforms will be declared illegal, especially foreign platforms,” Kovalev added.

Amendments to the mining law for second reading

According to Kovalev, the Ministry of Finance is already proposing to remove from the text of the bill the ban on organizing the circulation of digital currency in Russia, allowing the exchange using the national infrastructure.

“We can assume that if mining is legalized in our country, this will lead to the circulation of cryptocurrencies within the country and the possibility of paying for services and goods with them. The other day Vladimir Putin said that in Russia it is necessary to create an infrastructure for the circulation of digital assets, not only within the country, but also in business relations with participants in foreign economic activity,” the lawyer explained.

Deputy Chairman of the State Duma Committee on Information Policy, Chairman of the Board of ROCIT Anton Gorelkin He noted that the package of amendments for the second reading is almost ready and provides for the abolition of restrictions on the circulation of cryptocurrencies in the Russian Federation.

“I hope that he will take into account some of the industry’s comments and remove restrictions on the development of the domestic segment of the cryptocurrency industry. In particular, we will insist on lifting the ban on organizing traffic. Setting tariffs for miners will also have to be discussed separately with the Ministry of Energy,” Gorelkin noted.

At the time, First Deputy Chairman of the State Duma Committee on Energy Valery Seleznev He believes that not all the regulations included in the bill will benefit industrial mining.

For example, the discriminatory conditions provided for by the draft for the supply of energy to data centres in certain regions, the ban on organising the circulation and advertising of digital currencies require additional mitigations and adjustments in order not to harm the industry and its capabilities, including in cross-border payments, the MP believes.

“I think that some mitigating amendments should be made to the bill in relation to the proposed rules for the supply of energy for mining. We also need to synchronize the individual provisions of the bill on the ban on advertising and the treatment of the provisions of the bill on EPR (experimental settlement platform) for digital currencies, also approved in the first reading,” Seleznev concluded.

As reported by RB.RU, by the end of 2023 the total revenue of mining companies in Russia amounted to about 20 billion rubles. The leader remains BitRiver, which has about 12 data centers with a capacity of 530 MW and plans to increase the number of sites with a capacity of more than 1 GW. Another major player, Intelion Data Systems, has a total capacity of 136 MW and plans to build new data centers with a capacity of 345 MW.