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Russian Crypto Miners Tell Lawmakers: ‘Hurry up and Legalize Our Industry’

Tim Alper
Last updated: | 3 min read
Source: AdobeStock / Klever_ok


Russian crypto miners say they want their industry to be legalized – and hope that official status could help them avoid spats with power providers.

Lenta reported that the situation for miners in the Irkutsk Oblast in Siberia has deteriorated of late.

As previously reported, in October, Igor Kobzev, the Governor of the Irkutsk Oblast in southeastern Siberia, appealed to the Deputy Prime Minister and de facto government power chief Alexander Novak to “complain about illicit cryptocurrency miners” whom he claimed were causing dangerous spikes in consumption.

Kobzev has since backtracked somewhat and taken a conciliatory tone. Late last month, he even spoke about helping miners settle in the region – provided the government follows through with legislation that would force miners onto new tariffs. 

At present, many in the area – and elsewhere in Russia – are paying highly subsidized, low electricity rates intended for residential and non-industrial or non-commercial use.

However, as mining has no legal status in Russia, power companies have found it hard to force miners onto higher tariffs while politicians continue to make little headway with their legislative efforts.

But the Oblast’s energy provider, Irkutskenergosbyt, appears to have had enough – and is now taking matters into its own hands. Lenta noted that the firm has perused legal action against 85 miners in the region – mostly individuals mining from home. Thus far, the company has won nine of these cases, with a number of others still active.

Some miners have expressed outrage at the move, but others claimed that the power company has a point – and that only the government has the power to solve the matter.

The media outlet quoted Vitaly Borshchenko, the co-founder of the crypto mining equipment specialist BitCluster, as complaining that “given the lack of clear definitions in [existing] legislation,” it was “unclear on what grounds the use of computing-related devices” was being “recognized as a commercial activity.” 

Murad Yaliev, of the Irkutsk-based crypto “mining hotel” service MinerWorld, was also quoted as saying there was “no legal basis for” the move.

But in a separate article from the same media outlet, others disagreed. The crypto mining firm EMCD’s sales chief Dmitry Kudinov was quoted as stating:

“You can see where Irkutskenergosbyt is coming from.”

In some cases, he noted, miners were not being forthcoming about their activities, and “large amounts of electricity consumption” had spiked an increase “in the company’s debts” – debts that were “constantly growing” with the influx of new miners to the region. Ultimately, he noted, the bill would “have to be covered by [ordinary] citizens” in the region.

Kudinov opined that the whole problem could have been avoided if an appropriate legislative framework had been set in place in Russia in the first place.

A blockchain specialist at the same firm, Denis Smirnov, was quoted as adding:

“Since crypto mining is an [extremely] energy-intensive activity, it should be classified as a commercial activity. I do not believe that Russia will lose its status as an attractive region for miners if mining is recognized as an official [industrial sector]. On the contrary, it will increase the attractiveness [of Russia] as a mining destination.”

Smirnov said that legislation would make “the rules of the game” very “clear” for miners, and would remove elements of uncertainty from miners’ business plans.

He concluded:

“Legislative initiatives and regulation will attract a large number of market participants to [Russia], and it is this step that will allow Russia to become the [global mining industry]’s flagship.”


Learn more:

Bitcoin & Crypto Mining Costs Might Increase in Russia As Regions Complain
Taxes, Higher Electricity Rates Coming for Russian Bitcoin Miners – Lawmaker

Russian Central Bank Says No As Ministries Hope to Legalize Bitcoin Mining
Russia to Ban Funds from Crypto Investment, Experts Warn of ‘Blurry’ Legal Status

Bitcoin Miners Blamed for Energy Issues as Kazakhstan Looks to ‘Limit’ Mining
Abkhazia to Build New Crypto Mining Technopark – and a Power Station to Fuel it

No, ‘Un-banning’ Bitcoin Mining Is Not on Beijing’s Agenda
US Becomes Largest Bitcoin Mining Hub After China’s Miner Exodus