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Russian Central Bank Says No As Ministries Hope to Legalize Bitcoin Mining

Tim Alper
Last updated: | 2 min read
Source: Adobe/999xy

The Russian Ministry of Economic Development has expressed a willingness to legalize Bitcoin (BTC) and crypto mining, and has the backing of the Ministry of Energy – but as so often is the case with Russian politics and all things crypto-related, the Central Bank wants to throw a spanner into the works.

According to Izvestia, a Ministry of Economic Development spokesperson stated:

“The recognition of mining as entrepreneurship will allow [the government to] tax income from such activities and thus increase state budget revenues.”

The spokesperson added that ministry officials are already “discussing the initiative with the business community and entrepreneurs,” who are planning to present the government with proposals for mining projects “in the near future.”

University of Cambridge data compiled in August this year shows that Russia’s average monthly Bitcoin hashrate, or the computational power of the network, accounts for 11.23% of the global total. 

The Central Bank, however, has already poured scorn on the plans. A spokesperson said that the bank “does not support any initiatives that promote the emergence of monetary surrogates.”

The bank, which favors the development of a state-controlled digital currency, has urged the Kremlin to push forward with a China-style crackdown and effectively outlaw crypto. Business leaders, the aforementioned ministries and finance chiefs have urged adoption, though – a fact that has led to an impasse that has so far lasted years.

The head of the Central Bank, Elvira Nabiullina, has recently warned against investment in “speculative cryptocurrencies,” adding:

“[Crypto] prices are very volatile, and losses can be enormous. The Central Bank never gives advice on where [people should] invest their money. But in the particular case [of crypto], [tokens] are definitely not a good investment choice.”

Regardless, the Digital Economy department deputy chief at the ministry, Aleksey Minaev, was quoted as stating that the crypto mining industry “deserves respect and regulation,” and claimed that the “state can receive benefits in the form of taxes,” while miners could “legalize their incomes.”

The energy ministry concurred, although it noted that miners may need to pay for electricity at a different rate, instead of being allowed to use the same rates as domestic users.

Similar comments were made previously by the head of the State Duma‘s Committee on the Financial Markets, Anatoly Aksakov, who has previously spoken out in favor of recognizing crypto miners as “entrepreneurs.”

Aksakov has hinted that under current regulation, crypto mining is not illegal, adding that more clarity was needed over taxation on miners’ profits.
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