Russia has taken steps to limit cryptocurrency mining in specific regions to deal with potential energy shortages through the winter months.

The federal government commission overseeing the country’s energy management announced a seasonal ban on mining activities in several Siberian regions.

Reason Behind The Seasonal Bans?

In line with the report, the seasonal bans in multiple Siberian regions in Russia are because these areas are known for his or her inexpensive electricity because of their proximity to hydropower plants, which have made them hubs for mining operations.

The seasonal strain on the energy grid, coupled with Siberia’s harsh winters, has led authorities to prioritize domestic energy needs over industrial mining activities.

The restriction also extends to areas of Ukraine that Russia has declared “annexed.” A lot of these regions have suffered significant damage to their energy infrastructure since 2022, causing frequent power outages.

With limited resources to rebuild the grid, authorities have deemed it mandatory to curb energy-intensive activities like cryptocurrency mining.

These measures come as Russia continues to regulate several of its regulation rules on cryptocurrency since Russian President Vladimir Putin enacted a law permitting the experimental use of cryptocurrencies for international payments and foreign exchange transactions in July.

Notably, the Siberian regions near Lake Baikal are particularly affected by the ban, as they’ve grow to be popular hubs for crypto mining because of low energy costs. Reports have it that hydropower plants in these areas have traditionally provided inexpensive electricity, attracting each domestic and international miners.

Nevertheless, the increased consumption has created challenges for the local energy supply, particularly during winter, when demand surges for heating and other essential needs.

Prior to the finalization of this seasonal ban, Russia’s state news agency TASS already initially reported that this ban in specific areas of the country was going to happen. Yevgeny Grabchak, Deputy Head of the Ministry of Energy of the Russian Federation commenting on this development noted:

If we are saying that the forerunner of digitalization is mining, then mining might be banned on the state level within the near future in some regions. Anyone.

Meanwhile, Russia’s Ministry of Energy estimates that cryptocurrency mining consumes roughly 16 billion kilowatt-hours annually, corresponding to 1.5% of the country’s total electricity consumption.

Russia’s Continous Regulation Of Crypto

It’s value noting that this development comes at a time when the Russian government has recently implemented a 15% tax on all crypto mining and trading activities.

Particularly on November 18, the Russian government announced its “approval” of draft amendments to the bill addressing the taxation of income and expenses related to mining and trading digital assets. The Russian Finance Ministry highlighted the explanation behind this move noting:

Consequently of discussions with businesses, a call was made on the advisability of taxing the financial result from mining because the fairest reflection of the outcomes of this activity. This approach is geared toward observing a balance between the interests of companies and the state.

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