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In summary
- Months after legalizing Cryptocurrency Mining, Russia has announced a ban on the practice “in some regions” due to electricity shortages.
- According to a report by the Russian state news agency TASS, the Deputy Head of the Ministry of Energy of the Russian Federation, Yevgeny Grabchak, announced that “mining in the near future will be prohibited at the state level in some regions.”
- Grabchak claimed that electricity shortages in certain regions were the reason behind the ban, mentioning the Far East, southwestern Siberia and the South as affected areas.
Months after legalizing cryptocurrency mining, Russia has announced a ban on the practice “in some regions” due to electricity shortages.
According to a report by the Russian state news agency TASS, the Deputy Head of the Ministry of Energy of the Russian Federation, Yevgeny Grabchak, announced that “mining in the near future will be prohibited at the state level in some regions.”
Grabchak claimed that electricity shortages in certain regions were the reason behind the ban. “We, for example, already have scarce areas: this is the Far East, this is southwestern Siberia, this is the South,” he said, adding that capacity will be limited in those regions “until 2030.”
In August 2024, Russian President Vladimir Putin signed a law allowing cryptocurrency mining in the country, where it was previously prohibited. Under the law, mining is limited to legal entities and individuals that register with the Ministry of Digital Development, and unregistered entities will face restrictions based on energy limits.
The law also allows Russian residents to trade digital currencies. This law arose after a bill legalizing cryptocurrencies for international transactions, widely seen as an effort to evade sanctions imposed by Western countries.
Cryptocurrency mining involves using computers to verify transactions on the underlying Blockchain network of a digital currency, and is part of the consensus mechanism for cryptocurrencies like Bitcoin.
Miners have engaged in an “arms race” using increasingly powerful computers to increase their chances of receiving block rewards, with a corresponding growth in energy consumption.
In 2022, Putin argued that Russia had “certain competitive advantages” in cryptocurrency mining, pointing to “the surplus electricity and highly trained personnel available in the country.”
Edited by Stacy Elliott.
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