As reported by local news agency Izvestia on Tuesday, Russia’s Ministry of Economic Development proposed to legalize and regulate crypto mining operations in Russia by taxing Bitcoin mining in regions with an electricity surplus. Although currently, Bitcoin mining is in a legal gray area as per the proposal, Bitcoin mining should be recognized as a form of “commercial activity” and taxed once coins are converted into rubles.

Once this proposal passes through, the Bitcoin mining operations taking place in areas having a sustainable surplus in electricity generation will be supported. The part of the proposal also suggests reducing the fees given by mining firms and data centers to build up a mining operation in Russia which is planned to be set up in specific locations in Russia. According to the ministry, the mining of bitcoin will be limited to reliable grids and electricity-use limits will be imposed on individual miners.

A proposal to incentivize industry growth will be explored by the ministry, as well as introducing lower electricity rates and tariffs for setting up cryptocurrency mining farms in specific regions. Energy prices will be raised when a certain energy threshold is passed.

the risks of insufficient power supply for housing social facilities and infrastructure in other regions of the country will get reduced through this new proposed rule. By avoiding crypto mining-related issues with electricity, the proposal will avoid the challenges Iran and Kazakhstan have experienced with Bitcoin mining overtaxing electrical grids in vulnerable areas.

The finance ministry of the country seeks to regulate the crypto industry. The head of liquid cooling tech provider Comino Evgeny Vlasov supported that mining should be allowed everywhere in Russia as it is a wise investment in the tech sector. President Vladimir Putin has also shown his belief that mining could bring economic benefit to the country as it has a “surplus of electricity” and “well-trained personnel.” but the Central Bank of Russia has insisted on banning the new asset class including Bitcoin and other cryptocurrencies saying it has risks to the investors,  financial system and volatility concerns. Recent negotiations between the Bank of Russia and the national government raise a concern about the regulation matter outcome.

Russia declared to have $200 billion in Bitcoin assets at the begging of the month.

Indrani bose

CBW - External Analyst

INDIA