Russian Provinces Free to Make Crypto Miners Pay Higher Electricity Rates, Says Gov’t

Mining Regulation Russia

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:54 EDT

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Crypto miners in Russia could be set to pay higher electricity fees in 2022, but the development could allow miners to ply their trade without further scrutiny from energy providers – who may even assist them in setting up their operations in ways that place less strain on local grids.

Some have been worried that the slow pace at which the government is moving towards crypto legislation would leave both the miners and power providers in limbo. But per the media outlets Kommersant and Glas Naroda, the government appears to have found a work-around that does not involve any legislative changes. 

In an official decree, the government explained that it has handed local governors the power to “independently determine the maximum volume of electricity consumption” that citizens can use at “preferential” residential rates. Anyone exceeding this maximum volume limit will be forced to pay higher rates – which can be determined by the regions and power companies themselves.

The system is not exactly brand-new: it has been pioneered in Crimea and particularly in its largest city, Sevastopol, where citizens’ energy usage at lower residential rates is capped at 150 kWh per month.

The Ministry of Energy assured that the measure was not a means to drive an increase in energy tariffs, claiming that its purpose was solely to “combat inappropriate energy consumption.”

Regions have also been given the power to set “different tariffs for certain groups of the population” – in other words, to ramp up electricity fees for people power providers have identified as crypto miners.

As for how it came to this situation, as previously reported, certain regions have complained to the government about escalating power usage on their grids. As mining has no legal status in Russia, at present, miners – particularly those working from home – pay the same fees as ordinary households for their electricity.

But some power companies, and regional governors, want crypto mining to be officially recognized as a form of industry or “entrepreneurship” – and want miners to pay for electricity accordingly. If they are prepared to do so, some governors have said, they will be actively welcomed and even assisted in their efforts.

Larger, industrial players have already expressed a willingness to play along – hoping that the government might “legalize” mining in the process and provide them with less regulatory uncertainty.

So, as stated, some have been concerned that the government’s glacial pace of crypto legislation creation would leave miners and power providers in an uneasy limbo for months to come.

But it looks like the changes brought about by the work-around might not take immediate effect. The Governor of the Voronezh Oblast, Alexander Gusev, was quoted as telling citizens in the Central Russian region that he wanted to “assure” them that “such changes” will “not take place until 2023.”

He added:

“For 2022, the electricity tariffs for Voronezh residents have already been fixed, following a decision that has already been taken by the federal authorities.”

Other more northerly regions, which have higher numbers of miners, may not want to wait that long, however.

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Learn more:

– Russian Crypto Miners Tell Lawmakers: ‘Hurry up and Legalize Our Industry’
– Russian Governor Who Slated Miners in October Now Plans to Welcome Them

– No Progress on Russian Crypto Law until February 2022 at the Earliest, Says Duma Chief
– Russia to Ban Funds from Crypto Investment, Experts Warn of ‘Blurry’ Legal Status

– Russia: Total Ban on Crypto Ownership Still on Table, Says Top Official
– Russian Senate Finance Chief Says Crypto ‘Probably Has a Future’