Regulatory Changes in Cryptocurrency Mining
In a significant regulatory move, the Russian government is preparing to prohibit data processing centers from engaging in cryptocurrency mining if they utilize electricity obtained at subsidized rates. According to RBC, a local media outlet, officials have revised a draft law pertaining to crypto mining that was initially introduced to the State Duma in 2022 and have advanced it for a second reading with adjustments based on stakeholder discussions.
Proposed Legislation Details
The proposed legislation would necessitate that data centers register with the Ministry of Digital Development and Communications, committing to refrain from mining activities. Only those who adhere to this stipulation would be eligible for discounted electricity prices. Lawmakers assert that the purpose of this legislation is to prevent cryptocurrency miners from exploiting these energy benefits, which are intended exclusively for facilities recognized as “communication facilities.”
While electricity providers in Russia currently offer subsidized rates to residential and commercial sectors, recent dialogues among lawmakers have pushed for the introduction of separate, unsubsidized rates specifically for crypto mining operations.
Voluntary Registration and Industry Reactions
Although signing up for the registry is intended to be voluntary, it comes with the caveat that any data centers that join will be denied the ability to host crypto mining rigs, whether or not these rigs are connected to the internet. This measure follows mounting concerns that the current setup offers undue advantages to miners at the expense of other sectors.
Reactions from the industry indicate that many were prepared for this legislative shift. Artem Shchepinov, Director-General of Intelion, opined that the measures would contribute to enhancing Russia’s technological independence and fortifying its digital infrastructure. Despite this, some industry insiders expressed dissatisfaction with the lack of input from the private sector during the legislative process. A blockchain expert cautioned that the proposed law might negatively affect both the industrial crypto mining landscape and the traditional data center industry.
Impact on Industrial Miners
However, some operators insist that the law will not significantly impact large-scale industrial miners. One operator emphasized that these facilities generally operate independently and are not dependent on governmental assistance. A noteworthy point is that several of these major industrial mining operations, such as Intelion, operate dual-purpose centers that can support both cryptocurrency mining and traditional IT services. Shchepinov mentioned that Intelion has proactively adapted its infrastructure in the Samara Oblast, creating separate clusters designed for both mining and artificial intelligence tasks simultaneously.
Financial Insights
As of May, it was reported that the total revenue for Intelion and BitRiver for the 2024 fiscal year surged to $200 million. Industry consensus indicates that approximately 90% of crypto mining operations in Russia focus on Bitcoin, while many individual miners still prefer Ethereum, according to insights from local cryptocurrency enthusiasts.
