Russia Bans Crypto Mining In Russia-Occupied Ukraine Territories, Cites Energy Shortage

Russia announced sweeping restrictions on cryptocurrency mining across various regions on 19 November 202. The restrictions include occupied territories in Ukraine. Russia cited energy shortages and the need to prioritize electricity supply during the winter months.

According to the Government website, the decision led by Deputy Prime Minister Alexander Novak and the Government Commission on Electric Power Development, is said to be in line with the nation’s efforts to balance its energy infrastructure with emerging demands from the crypto sector.

Russia Introduced Bitcoin Mining Bans Across The Nation

Starting Dec 2024, Russia’s Energy Ministry is clamping down on mining rigs in energy-stressed zones like Irkutsk, Chechnya, and DPR.

Reason? Subsidized power + limited juice = a tightrope of priorities.

The takeaway’s… pic.twitter.com/gSGLA5FIc6

— Mario Nawfal’s Roundtable (@RoundtableSpace) November 17, 2024

The move follows the recent legalization of cryptocurrency mining under strict regulatory oversight and is part of a broader strategy to manage Russia’s energy resources while addressing economic and geopolitical challenges.

EXPLORE: BRICS Payment Platforms Gain Momentum as US Dollar Alternatives, Says Russian Official

Mining Restrictions In Energy-Stressed Zones

The government’s latest directive targets specific regions grappling with energy deficits during the autumn-winter heating period including Siberian territories like Irkutsk, Buryatia and Zabaikalsky Krai where mining activities will face seasonal bans from 15 November to 15 March every year, until 2031.

The low cost of hydroelectric power has attracted substantial crypto mining operations in recent years, exacerbating local energy shortages in these areas.

Occupied regions in Ukraine, including Donetsk, Luhansk, Zaporizhia, and Kherson, are set to face a complete ban on mining activities starting December 2024, extending until March 2031.

The restrictions are essentially aimed at addressing the critical energy deficits in these areas where infrastructure damage from ongoing conflict has significantly strained electricity supplies.

The Energy Ministry’s stance reflects its commitment to reallocate electricity resources to socially significant consumers and essential infrastructure, ensuring uninterrupted supply during peak demand periods

EXPLORE: Russia Ready To Launch Trials Of Crypto Payments, Exchanges

Russia’s Stark Contrast In Crypto Policy 

The decision to impose mining restrictions comes just weeks after the legalization of cryptocurrency mining in Russia, marking a stark contrast in policy.

Despite the regulatory green light, the energy-intensive nature of mining has raised concerns, particularly in regions with fragile power grids or high demand.

Mario Nawfal, Founder & CEO of IBC Group, a leading blockchain consultancy critically noted, “Subsidized power + limited juice = a tightrope of priorities.”

Official statistics indicate that Russia could be one of the world’s largest crypto mining hubs, consuming an estimated 16 billion kilowatt-hours annually (approximately 1.5% of the country’s total electricity), drawing significant attention.

By imposing these restrictions the government seeks to mitigate the impact of mining on local communities while maintaining its broader goals of fostering digital asset innovation.

According to Reuters report, the country expects to collect up to 200 billion roubles ($2 billion) annually from newly introduced mining taxes, emphasizing its dual approach to regulation and resource allocation.

The new framework also extends to Russia’s North Caucasus region, including Chechnya and Ingushetia, which will face flat-out bans on crypto mining until 2031.

These regions, like the annexed Ukrainian territories, have struggled with limited electricity availability further necessitating regulatory intervention.

EXPLORE: Ukraine deems Bitcoin illegal, Coinbase fights for new $50 million founding round and more

Broader Implications For The Crypto Industry

While the bans aim to alleviate immediate energy concerns, they also signal a shift in Russia’s approach to integrating cryptocurrency into its economy.

The restrictions come amid geopolitical tensions and a fragile energy landscape exacerbated by the ongoing conflict with Ukraine. These factors have made efficient energy use a national priority.

At the same time, Russia has outlined plans to formalize its cryptocurrency industry. The government is considering the creation of a national cryptocurrency exchange in Moscow and St. Petersburg, signaling an effort to integrate digital assets into its economic framework.

Additionally, newly introduced mining-specific tax regulations suggest an attempt to regulate the sector while addressing concerns over energy consumption and resource allocation.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

The post Russia Bans Crypto Mining In Russia-Occupied Ukraine Territories, Cites Energy Shortage appeared first on .