Mining cryptocurrencies in Russia

The main articles are:

• Mining cryptocurrencies
• Cryptocurrencies in Russia

How to mine cryptocurrency yourself

Main article:

• How to mine cryptocurrency yourself
• Cloud mining

Illegal mining

Main article: Illegal mining

Hidden mining (Cryptojacking)

Main article: Hidden mining (Cryptojacking, cryptojacking)

Register of miners in Russia

Main article: Register of persons engaged in digital currency mining

2024

FTS launched a service for registering miners

On November 1, 2024, it became known that the Federal Tax Service of Russia launched the MiningRegister service to register companies and individual entrepreneurs engaged in digital currency mining, as well as mining infrastructure operators. Read more here.

Russian Prime Minister Mikhail Mishustin approved requirements for miners and operators of mining infrastructure

On November 1, 2024, the Government of the Russian Federation approved the requirements for mining infrastructure operators and miners. It is allowed to spend 6 thousand kVt·ch of electricity per month on the extraction of cryptocurrencies.

In accordance with the established rules, individual entrepreneurs and organizations can engage in mining after being included in special registers maintained by the Federal Tax Service (FTS) of Russia. Information from these databases will be available to the authorities, courts, the Bank of Russia, territorial network organizations and the "System Operator of the Unified Energy System." In addition, miners will be able to mine cryptocurrency without being included in the register, subject to the limit on electricity consumption - 6,000 kilowatt-hours per month. If it is exceeded, an individual will need to register as an individual entrepreneur for further mining of cryptocurrencies.

Mikhail Mishustin

Mining users must provide the Federal Tax Service with information on the volume of the received digital currency and the identifier address. In turn, the operators of the mining infrastructure are obliged to ensure the uninterrupted and reliable provision of services, the protection of processed data, the stability of the power supply system, and also must create internal control and risk management services.

As noted by RIA Novosti, if inaccurate information is identified, repeated violations during the year of the requirements of the "anti-money laundering" law, if the electricity consumption regime is violated in territories where mining is prohibited, or if bankruptcy occurs, miners will be excluded from the register. The government approved the rules for introducing a ban on mining, and also determined the features of the technological connection of mining facilities and the procedure for limiting them in certain regions of the country.^[1]

Documents regulating mining:

• Decree of the Government of the Russian Federation No. 1479 Amendments to the PPRF No. 861 and No. 442 (peculiarities of power supply to facilities where digital currency mining is carried out).
• "On the establishment of other cases of exclusion of a person engaged in digital currency mining (including a participant in the mining pool) from the register of persons engaged in digital currency mining."
• "On the approval of requirements for the activities of the mining infrastructure operator."
• "On the approval of the Rules for Maintaining a Register of Persons Engaged in Digital Currency Mining and the Rules for Maintaining a Register of Mining Infrastructure Operators."
• "On the obligation of the person carrying out the mining of the digital currency (including the participant of the mining pool) to provide information on the receipt of the digital currency in the event of the issuance (receipt) of the digital currency as a result of the mining of the digital currency, as well as on the address-identifier, including the address-identifier of the mining pool."
• "On the approval of the Rules for providing (opening) an address-identifier to federal executive authorities, prosecutor's offices, inquiry bodies and preliminary investigation bodies, bodies carrying out operational-search activities."
• "On the approval of the Rules for establishing a ban on digital currency mining (including participation in the mining pool) in certain constituent entities of the Russian Federation or in their separate territories."
• "On establishing the limit of energy consumption when mining digital currency (including participation in the mining pool) without inclusion in the register of persons who mine digital currency by individuals - citizens of the Russian Federation who are not individual entrepreneurs, and on amending the Decree of the Government of the Russian Federation of December 29, 2011 No. 1178."

The signing of the law on the regulation of mining

On October 25, 2024, Russian President Vladimir Putin signed a law regulating cryptocurrency mining. The document is aimed, in particular, at creating a legal framework for controlling activities related to the extraction of digital currency.

In accordance with the approved rules, control over the register of miners passes from the Ministry of Digital Development of the Russian Federation to the Federal Tax Service (FTS). The agency will be able to exclude companies from the register if repeated violations are detected within one year. Miners will be able to mine cryptocurrency without being included in the register, subject to electricity consumption limits. At the same time, miners need to provide the Federal Tax Service with information about the earnings received in the form of digital currency and about the identifier addresses that are used for transactions with it. The tax department will transfer data on cryptocurrency miners to Rosfinmonitoring and the Bank of Russia.

Russian President Vladimir Putin

At the same time, the Russian government receives the right to prohibit mining in specific regions and in their individual territories, as well as to determine the procedure and cases of the introduction of such restrictions. In particular, participation in a mining pool, that is, in a special association of miners who use the capacities of their devices to extract digital currency, may be banned. In addition, the Cabinet of Ministers will be able to regulate the activities of operators providing mining infrastructure.

We see cryptocurrencies as a tool to circumvent sanctions and a high-tech export point. Today Russia ranks second in mining, and I am sure: after the regulation of this area appears, we will come out on top, overtaking the United States, "says Anton Gorelkin, Deputy Chairman of the Committee on Information Policy, Information Technology and Communications.[2]

FTS explained the principles of taxation of mining

In mid-October 2024, the Federal Tax Service (FTS) of Russia presented explanations on the principles of taxation of cryptocurrency mining. According to the new rules, mining companies will be subject to income tax in two stages, and individuals - personal income tax (personal income tax).

Alexei Katyaev, head of the interregional inspectorate for the largest taxpayers No. 7 of the Federal Tax Service, explained that the first stage of taxation occurs at the time of crediting the cryptocurrency to the miner's ID address. The second stage occurs when cryptocurrency is retired from this address or when it is sold.

Clarification of the principles of mining taxation

At the same time, the tax base begins to be calculated from the moment when the miner has the right to dispose of cryptocurrency, even if it is still at the address in the mining pool. If the value of cryptocurrency increases from the moment the tax is first paid, the company will have to pay additional tax on additional profits. In case of a decrease in value, losses will need to be indicated as a loss.

The Federal Tax Service emphasizes that mining losses cannot be transferred to other types of company activities and vice versa. In addition, mining will not be subject to value added tax (VAT), since namained cryptocurrency is not used domestically, with the exception of special experimental legal regimes.

Alexey Katyaev also spoke about the three registers that the Federal Tax Service will maintain: operators of the mining infrastructure, the miners themselves and the mined cryptocurrency. The register of mined cryptocurrency will be closed to ensure the safety of market participants.

To be included in the registers, companies need to put in order documentation on connection to power grids and equipment. Deputy General Director for Communications BitRiver Oleg Ogienko noted that this will increase transparency and competition in the industry.

General Director of Intelion Data Systems Timofey Semenov expressed the opinion that control by the Federal Tax Service will make the industry more transparent, which could lead to the exit of large players to exchanges and attract additional investments.^[3]

Mining limited in Buryatia due to energy shortage

The authorities of the Republic of Buryatia decided to restrict mining cryptocurrencies the territory of the region in connection with the energy shortage, which became known on October 14, 2024.

According to Interfax, Deputy Prime Minister of Buryatia Yevgeny Lukovnikov explained through the press service that this measure was taken after an audit carried out by the Commission of the Ministry of Energy of Russia in December 2022. During the audit, a change in the direction of electricity flow was revealed - instead of coming from the Irkutsk region, energy began to be transmitted in the opposite direction due to the high consumption associated with mining in the neighboring region.

Mining is limited in Buryatia due to energy shortage

According to Lukovnikov, the government of Buryatia expressed the position that mining should be limited or even disabled in cases where it begins to negatively affect the life of the region.

To solve the problem of energy shortages in Buryatia, a number of measures are being implemented. Modernization of the TETs-2 has begun, it is planned to increase the number of power units of the Gusinoozerskaya state district power station, as well as the construction of a 32 MW substation in the center of Ulan-Ude. In addition, solar power is actively developing in the region - six solar power plants with a total capacity of 115 MW have already been built, and the construction of two more stations with a capacity of 50 MW each is planned.

The problem of growing energy consumption associated with cryptocurrency mining is relevant not only for Buryatia. In the summer of 2024, Russian President Vladimir Putin noted that an uncontrolled increase in electricity consumption for the extraction of cryptocurrencies could lead to a shortage of capacity in certain regions of the country, including the Irkutsk region and the Trans-Baikal Territory.

According to estimates by the Ministry of Energy of Russia, 16 billion kVt⋅ch of electricity is spent annually for cryptomining, which is almost 1.5% of the total energy consumption in the country. At the same time, there is a trend towards a further increase in this indicator.^[4]

The Russian government has given the Federal Tax Service the authority to monitor compliance with mining requirements

On October 9, 2024, the Government of the Russian Federation announced a resolution on a federal executive body authorized to establish, in agreement with the Central Bank, a ban and (or) restrictions on transactions with digital currency in order to ensure the financial stability of Russia. In addition, the document determines the departments authorized to regulate mining.

In particular, the Federal Tax Service (FTS) is empowered to receive from the person carrying out the mining of the digital currency (including the participant of the mining pool), information about the receipt of such an asset, as well as about the address-identifier, including the address of the mining pool.

The Government of the Russian Federation transferred to the Federal Tax Service the authority to control the implementation of requirements in the field of mining

In addition, the Federal Tax Service receives the authority to provide information provided for by the Law "On Digital Financial Assets, Digital Currency and on Amending - Certain - Legislative - Acts of the Russian Federation" to the federal executive body exercising the functions of countering the legalization (laundering) of criminally obtained income, financing terrorism and financing the proliferation of weapons of mass destruction. The resolution says that the Federal Tax Service is a federal executive body authorized to exercise control (supervision) over compliance with the requirements of the aforementioned law.

The law on the legalization of mining was adopted in August 2024. It has been established that technological connection to the power grid facilities of energy receiving devices used for mining digital currency is allowed if the miner is included in the "register of persons engaged in mining digital currency, or the register of mining infrastructure operators," and if the government has not established a ban on mining in the region or in a separate territory.^[5]

The volume of energy consumption by miners in Russia exceeded 2.5 GW

The volume of energy consumption by miners in Russia in September 2024 exceeded 2.5 GW. This was announced by the founder and CEO of Bitriver Igor Runets. According to him, the mining consumption profile is similar to the energy consumption profile of greenhouse farms, metallurgy, and the artificial intelligence industry. Mining farms consume electricity continuously, at the maximum possible capacity.

Runets noted that "gray" miners are connected at tariffs for the population to communal power grids, and they are not designed for a consumption profile characteristic of mining. In addition, such "gray" mining often exceeds the actual volume of consumption over the declared during technological connection, can carry out consumption on the own needs of power plants, writes off its consumption for losses in electrical networks

In Russia, there is a frantic increase in demand for mining equipment after the adoption of the law

In Russia, there is a significant increase in demand for mining equipment after the adoption of a new law regulating this industry. The legislative changes adopted in August 2024 clarified the rules of the game in the mining market, which attracted both large investors and individuals seeking to use new opportunities. This was confirmed by representatives of the Industrial Mining Association, the largest mining company of the Russian Federation BitRiver and the distributor of equipment for mining Chilkoot.

According to Kommersant, before the legalization of mining, the number of requests for the purchase of equipment averaged 150-200 per month. However, after the adoption of the law, the number of appeals almost tripled. Chilkoot reported that at the end of July 2024, amid news of the adoption of the bill, there was a significant increase in interest in mining equipment. This growth continues in August 2024.

In Russia, there is a surge in demand for mining equipment after the adoption of the law

The adopted law clearly defined such concepts as "mining digital currency," "mining pool," "mining infrastructure operator" and other key terms. The law also introduced restrictions on advertising and offering digital currency to an unlimited range of people, established registers for mining persons and infrastructure operators.

Oleg Ogienko, Deputy General Director for Communications at BitRiver, believes that the adoption of the law was an important step in the development of a new high-tech industry. According to him, since the introduction of bills to the State Duma in April 2024, there has been an increase in demand for BitRiver services from both Russian and foreign customers. It also led to increased business contacts with financial market participants and developers in the field of artificial intelligence.^[6]

Russia has adopted a law on mining cryptocurrencies. Main provisions

On July 30, 2024, the State Duma of the Russian Federation adopted a law on the regulation of cryptocurrency mining. The document assumes that the requirements for the activities of individuals and legal entities engaged in the extraction of digital currency will be established by the government in agreement with the Bank of Russia. At the same time, the Cabinet of Ministers will be able to ban mining in certain regions of the Russian Federation.

The introduction of regulation of the mining sphere, as well as the establishment of certain requirements for such activities, according to the authors of the bill, will allow legally to extract cryptocurrencies, declare the income received, as well as ensure the calculation and payment to the budgets of all levels of relevant tax payments. In addition, this will make it possible to mitigate the legal risks associated with this activity. The document introduces the concepts of mining itself, as well as the mining pool, mining infrastructure and its operator.

Russia adopted a law on mining cryptocurrencies

Mining refers to the activity of carrying out mathematical calculations by using technical and software hardware to make entries in the information system, which uses, among other things, the technology of a distributed register for issuing digital currency, or the receipt by the person carrying out such activities of a reward in digital currency for confirming records in the information system. The mining pool is considered to be a combination of the capacities of several technical and software and hardware tools owned by different owners and used to extract digital currency. Mining infrastructure is objects designed to accommodate equipment.

In accordance with the law, Russian legal entities and individual entrepreneurs (individual entrepreneurs) included in the register of the Ministry of Digital Development of the Russian Federation will be able to engage in mining. Russians who are not individual entrepreneurs will be able to extract digital currency without being included in the register, if they do not exceed the energy consumption limits established by the government of the Russian Federation. A legal entity and an individual entrepreneur have the right to carry out the activities of a mining infrastructure operator after being included in the relevant register, which will also be maintained by the Ministry of Digital Development.

At the same time, legal entities and individual entrepreneurs are prohibited from combining the implementation of digital currency mining with activities for the transfer of electric energy, activities for operational dispatch management in the electric power industry, activities for the production or sale of electric energy. Persons extracting cryptocurrency will have to provide information about the received assets and ID addresses to Rosfinmonitoring. Mining will not be able to engage in individual entrepreneurs who have an unresolved or outstanding criminal record for crimes in the field of economics, against state power, or for intentional crimes of moderate severity, grave and especially grave crimes.

Violation of prohibitions or mining without inclusion in these registers may entail "a decrease in the maximum connected power up to the complete disconnection of such energy receiving devices from the electrical network." The previously paid fee for the technological connection of the equipment cannot be returned.

We believe that power engineers have an effective mechanism for building control against "gray" and "black" miners. Special limits will be set, and power engineers will be able to control the field with their help and bring violators to justice. Today Russia ranks second in mining, and I am sure: after the regulation of this area appears, we will come out on top, overtaking the United States, "says Anton Gorelkin, co-author of the initiative, deputy chairman of the Committee on Information Policy, Information Technology and Communications.[7]

Russia adopted a law obliging miners to report to Rosfinmonitoring

Russia has adopted a law obliging miners cryptocurrencies to report to. Rosfinmonitoring State Duma of the Russian Federation On July 23, 2024, in the third reading, it approved amendments to federal law No. 115-FZ "On countering the legalization (laundering) of proceeds from crime and the financing of terrorism."

The new law extends the effect of anti-money laundering legislation to the cryptocurrency industry, in particular, to mining. According to the adopted amendments, miners and operators of mining pools will be required to collect and store information about their customers, fulfilling the "Know Your Customer" (KYC) principle.

Miners now have to report to the state

Legislative changes give miners and operators of mining pools the right to demand identity documents and other necessary papers from customers to fulfill the requirements of the law. In addition, in case of suspicion of using their activities to launder money or finance terrorism, they are obliged to report this to the relevant authorities.

An important aspect of the new legislation is to exempt miners from liability for freezing assets or property of customers, if these actions are carried out as part of the fulfillment of the requirements of the law. The Russian government will determine the procedure by which miners and operators of mining pools must transmit information to Rosfinmonitoring. The adopted changes will come into force on January 1, 2025, giving market participants time to adapt to new requirements.

With the adoption of this law, it will not be easy to legally mine cryptocurrency in Russia, "commented Oleg Nikolaev, managing partner of the Legal Strategies legal bureau.

By July 24, 2024, it is expected that in the near future the State Duma plans to adopt another law regarding mining. It is expected that it will establish additional rules for the extraction of digital assets, which could significantly affect the development of the cryptocurrency industry in Russia.^[8]

Why insurance companies in Russia refuse to insure equipment for mining cryptocurrencies

In July 2024, Russian insurance companies continue to refuse to insure cryptocurrency mining equipment, despite growing demand from leasing companies and mining enterprises. This trend is due to a number of factors, including the lack of clear regulation of the industry and the high risks associated with the operation of equipment.

According to Kommersant, the main reasons for insurers' refusal to work with mining equipment are the rapid obsolescence of equipment, high wear and tear and only the emerging secondary market. In addition, the high volatility of cryptocurrencies and the increase in the cost of spare parts for computer equipment reduce the likelihood of self-sufficiency.

In July 2024, Russian insurance companies continue to refuse to insure cryptocurrency mining equipment

According to the company's co-founder 51ASIC Mikhail Brezhnev, the industry uses at least 500 thousand specialized devices with a total electric capacity of about 1.8 GW. At the same time, more than 10% of the company's sales were 51ASIC carried out with the participation of leasing companies, and the amount of transactions reached ₽500 million.

The reason is simple - in this industry, the equipment operates in a mode that is clearly not intended for this by the manufacturing plant. This is comparable to participation in races in a regular civilian car, - explained Evgeny Ilchenko, director of the underwriting and reinsurance department of Absolut Insurance.

Only two of the surveyed insurance companies confirmed that they work with mining equipment or had such experience. Renaissance Insurance reported that they insure it as computer equipment at tariffs 1.5-2 times higher than standard, given the increased operational load. Sogaz noted that insurance programs take into account the high level of deductibles or payments, taking into account the wear of equipment.

Despite the difficulties with insurance, the demand for leasing mining equipment remains high. According to the National Rating Agency, in 2024 the volume of industrial leasing in physical terms increased by 30%, while the largest increase - by 120% - was recorded in the segment of computer equipment.^[9]

Russian mining company BitCluster launches data center in Ethiopia

In early July 2024, the Russian mining company BitCluster announced the launch of its data center in Ethiopia. The event has become part of a trend in which the African country is actively attracting miners from around the world, offering attractive conditions for doing business. Read more here.

Industrial mining operator Intelion will mine cryptocurrency

The Intelion Group of Companies, an operator of industrial mining in Russia, announced on April 25, 2024 to TAdviser that it was launching activities for the independent extraction of digital assets for the purpose of their subsequent export sale. The cost of the first purchased batch of equipment for this area amounted to 1.4 billion rubles, while as part of the project development roadmap, the company plans to significantly increase computing capacity in the coming months. Read more here.

Regulators have taken up industrial mining. What initiatives are criticized by lawyers and industry players

Regulators have recently stepped up their efforts in the industrial mining industry . Now all of them are aimed at a package of bills on mining, which includes bills on mining activities, on the experimental legal regime, on liability for illegal actions with digital currency, Osman Kabaloev, deputy director of the Financial Policy Department of the Ministry of Finance, said at a press conference on April 12.

This is the set of acts that, in the opinion of all federal executive bodies, the Bank of Russia and the law enforcement bloc, will start the regulation that we have been talking about for so long, "explained Osman Kabaloev.

The main idea of ​ ​ regulation is to determine the conceptual composition and create a register of real business, which will function according to the understandable and transparent rules of the game. Outside it will remain those who work around and use the received digital currency for incomprehensible purposes, says a representative of the Ministry of Finance. He added that the goal is not to complicate the conditions for doing business for participants in the mining industry.

At the beginning of 2023, Russia took second place in the world in terms of capacity used in cryptocurrency mining

Regulations governing mining have yet to be submitted to the State Duma and adopted. Meanwhile, current regulatory initiatives face criticism. This is especially true for the draft government decree prepared by^[10] Energy and published for public discussion in March 2024^[11] to^[12] the Russian^[13] for^[14]It aims to avoid power shortages in some regions due to rising electricity consumption by digital currency miners.

According to the document, in energy-deficient regions, the possibility of connecting miners to power grids will be limited, the cost of electricity transmission services for them may be overestimated by 5-10 times, and if a shortage threatens, the energy supply to miners may be limited first of all. The document provides that the government will determine energy-deficient regions, where the connection of miners to power grids is limited.

In such regions, it is planned to create commissions that will identify facilities where mining is carried out, and maintain a register of such facilities, taking into account information on electricity consumption and the nature of the load on the power grid. It is proposed to assign the separation of mining from "useful calculations" to the Ministry of Digital Development.

Denis Shchekin, founder and managing partner of the Shchekin & Partners law firm, who also spoke at a press conference on April 12, recalled that mining is now a legal activity in the Russian Federation. According to the 2020 259-FZ, the exchange of goods, works, services for digital currencies is prohibited, and the production of digital currencies, that is, mining itself, is within the framework of the law. This, the lawyer believes, should be taken into account, assessing what the Ministry of Energy proposes to the government - to accept an increase in tariffs for electricity supply.

An increase in tariffs by 10 times in certain regions is actually a ban on this type of activity in the relevant regions, despite the fact that mining is a legal activity. A legal question arises: can the government, as the Ministry of Energy proposes to it, prohibit legal activities in the Russian Federation? Of course not, because Art. 8 of the Constitution speaks of freedom of economic activity, Art. 34 - of freedom of entrepreneurial activity. Yes, these freedoms may be limited under Art. 55 of the Constitution, but only by federal law, not by a government decree. And the government decree is aimed at ensuring that there is no mining in these regions. That is, this is a form of prohibition, - says Denis Shchekin.

A number of regulatory initiatives in the field of industrial mining were criticized by industry experts

If this measure is taken in the form it is, then we can expect appeals to the Supreme Court of the Russian Federation against the ruling as a regulatory act, the industry's appeal to the Constitutional Court, the prosecutor's office, the antimonopoly service in connection with signs of violation of competition protection legislation. There may also be disputes in arbitration courts.

In addition, Art. 8 of the Constitution provides for the unity of economic space in the Russian Federation. Accordingly, in some regions mining will be possible, while in others it will not be possible due to the "suffocating tariff." And from the point of view of competition, this is a discriminatory measure, the lawyer believes.

Also, he notes, the initiative does not correspond to tariff regulation in the field of electricity, because Art. 23 of the law on the electric power industry says that the tariff should be economically justified, linked to the cost and a certain rate of profit.

What is a 10-fold tariff increase? What costs have risen 10-fold since the beginning of this year? We are invited to introduce a tenfold tariff in the middle of this year. No costs grow 10 times over such a period, - Denis Shchekin believes. - Therefore, this is not a tariff. This once again confirms that this is a prohibitive measure.

He also recalled that since 2022, the United States, within the framework of the sanctions policy, has been taking measures against Russian mining companies, because they help Russia monetize its natural resources. At the same time, the United States referred to the fact that Russia has comparative advantages in crypto-mining due to energy resources and a cold climate. According to Denis Shchekin, the draft resolution from the Ministry of Energy contradicts, in addition, the national interests of the Russian Federation.

Oleg Ogienko, director of interaction with government agencies of the operator of mining data centers and importer of mining equipment BitRiver, notes that Russia's competitiveness in mining is huge, and at this stage the industry requires balanced regulation. The package of bills to regulate mining for submission to the State Duma is at the final stage of approval, but BitRiver believes that now "a number of authorities are working on the concept of regulating the industry is extremely destructive, where mining is not called mining, but is called differently, and some proposals are extremely negative."

Among the latter, Oleg Ogienko notes the initiative to increase tariffs, which many criticize. Another negative aspect in this concept, which he notes, is the creation of "reservations for industrial mining." Industrial miners will be told which region they go to build their data centers, and where not to go. At the same time, no one is interested in what conditions in these regions. In such conditions, industrial mining cannot develop, says Oleg Ogienko.

The third negative aspect is a return to the discussion of the kVt·ch tax for industrial mining. This is actually a tax on electricity consumption and double taxation, because in addition, miners also pay income tax. Such measures were taken, for example, in Kazakhstan, Kyrgyzstan. But these countries are energy deficient, and there industrial mining did not develop as a result, says Oleg Ogienko. Such a measure, rather, will slow down mining, and not give impetus to its development.

Timofey Semenov, CEO of Intelion Data Systems, an operator for the sale and maintenance of computing equipment, an importer of blockchain computing equipment, believes that a vicious circle has now formed between miners and various federal investment funds, primarily in taxes, which, in turn, generates another vicious circle on power issues and increasing the transmission tariff, which in fact "has already reached direct discrimination."

As an industrial mining industry, we plan to come to a consensus with the Federal Investment Fund in the near future, and mining will become a full-fledged industry. Just now, with colleagues, including from the Federal Tax Service, the Ministry of Finance is conducting an intensive phase of questions and answers to the detailed nuances that are in the industry, - said Timofey Semenov. - And I think that such joint work will lead us to a balanced decision. It is important to understand that the decision really should be precisely balanced in terms of taxation, so that in absolute terms the state receives more taxes. And this is possible if business does not begin to migrate to other countries as it happened, for example, in Kazakhstan.

In terms of global mining capacity, Russia, according to the Industrial Mining Association (APM), ranks second in the world with a 13-15% hashrate share. First place in the United States. APM Director Sergei Bezdelov previously cited data that if weighted regulation is introduced, the tax potential of the industry is estimated at 50 billion rubles annually after 2025.

2023

Electricity consumption by miners in Siberia soared by 70% over the year

In 2023, electricity consumption by miners in Siberia increased by 70%. Unregulated cryptocurrency mining negatively affects the progressive development of the region. This was announced on September 11, 2024 by the plenipotentiary representative of the President of Russia in the Siberian Federal District Anatoly Seryshev.

According to him, as of September 2024, the power consumption of data processing centers, as well as applications from mining companies for the purchase of electricity, in total exceed the capacity of the largest in Russia Sayano-Shushenskaya HPP named after P.S. Neporozhny (6400 MW). In this regard, according to the plenipotentiary, it is necessary to accelerate the adoption of by-law regulatory legal acts that will introduce restrictions on mining activities in energy-deficient territories.

Over the year, electricity consumption by miners in Siberia increased by 70%

In August 2024, Russian President Vladimir Putin signed a law that legalizes cryptocurrency mining activities in the country. In accordance with the accepted norms, the right to exercise [[Cryptocurrency Mining | mining]] will receive only Russian legal entities and individual entrepreneurs included in the corresponding register.

Seryshev emphasizes that the instructions of the head of state are aimed at improving the reliability of energy supply to the regions of Siberia. The plenipotentiary says that the necessary emphasis to prevent a shortage of electric energy in the southeastern part of the united energy system of Siberia (taking into account promising consumers) is included in the plan for the implementation of the Strategy for the Socio-Economic Development of the District until 2035.

As part of the implementation of the strategy, as noted, additional comprehensive efforts will be aimed at updating generating and network equipment. At the same time, to assess the real state of equipment and networks, a system audit with the involvement of specialists will be required.^[15]

Mining 53 thousand bitcoins for $3.5 billion

In Russia, in 2023, about 53 thousand bitcoins were mined in the amount of about $3.5 billion. This was reported on June 13, 2024 by the Prime agency with reference to the data of the Industrial Mining Association of the Russian Federation.

According to the head of the association, Sergei Bezdelov, these indicators indicate the formation of a full-fledged crypto industry in the country. He stressed that bitcoin mining in Russia is carried out in significant volumes, despite the lack of full-fledged state regulation of this industry.

About 53 thousand bitcoins were mined in Russia in 2023

The Russian Industrial Mining Association, created in 2023, unites the largest participants in the Russian market, such as BitRiver, Intellion Mine, NGE Farm, Promminer, Stella and Hexacon. According to the association, the total volume of industrial mining in Russia is about 1.5-1.7 GW, which is 65% of the total mining market in the country. The remaining 35% came from private mining.

Sergei Bezdelov noted that in 2023, approximately 2.5 GW of electricity was used for mining in Russia, of which 1.7 GW falls on members of the association. This is equivalent to the capacity of a small country. According to him, about 40% of the market is occupied by "gray" miners working without official regulation.

In Russia, a bill on the regulation of cryptocurrency mining is being discussed, which is under consideration in the State Duma. Bezdelov expressed confidence that the introduction of clear regulatory norms will help bring a significant part of the market out of the shadows. He noted that blockchain technology has a high degree of transparency, and once registering in the system, it is impossible to remain in the shadow sector.

The Russian Ministry of Finance also supports the initiative to regulate cryptocurrency mining. According to the Prime agency, the bill was submitted for consideration in April 2024 by the United Russia party. The introduction of regulators will attract an additional 15% of the market to official participants, increasing the share of regulated industrial mining to 85%.^[16]

The Russian cryptocurrency mining market has doubled in a year

In 2023, Russia operated on average up to 2.2 GW of cryptocurrency mining capacity, which is more than double the volume of one year ago (1 GW). This is evidenced by the data released in May 2024 by BitRiver, which is the largest operator of mining data centers and an importer of mining equipment in the Russian Federation.

Director of the Industrial Mining Association Sergei Bezdelov confirms more than two times the growth of the Russian mining market in 2023 and said that in 2024 the growth rate could be another 20-40%. The dynamics in the market will depend on the "adoption of balanced regulation," he said.

In 2023, an average of up to 2.2 GW of cryptocurrency mining capacity worked in Russia

According to BitRiver estimates, in 2023, Russian miners mined about 54 thousand bitcoins, and the Russian Federation retained the second place after the United States (143 thousand bitcoins) in cryptocurrency mining, which it climbed a year earlier. In third place in 2023 is a group of Gulf countries, where 27 thousand bitcoins (1 GW) were mined.

As noted in the publication of Kommersant, cryptocurrency mining is popular in Russia due to cheap electricity and a suitable climate. The country also has many production sites that can be easily refocused on bitcoin mining.

51ASIC co-founder Mikhail Brezhnev, in a conversation with the publication, noted that bitcoin mining is profitable only in industrial mining, when tens or hundreds of high-efficiency computers are used.

According to the head of the direction of resolution of IT&IP disputes of the law firm "Rustam Kurmaev and Partners" Yaroslav Shitsle, the risks for miners are the regulation of the industry, which can make the extraction of cryptocurrencies less profitable and more expensive.

There are also risks associated with technical failures, hacker attacks, the volatility of the crypt itself, the lawyer added.[17]

Russia introduced special tariffs for electricity for cryptocurrency miners

On December 23, 2023, the Russian government approved a decree according to which the regions will be able to switch to a differentiated electricity tariff from January 1, 2024, depending on the volume of consumption. The rules will apply if the authorities decide to increase payments from organizations and individual entrepreneurs for reducing tariff rates for the population.

According to the Izvestia newspaper, indexation is possible in the constituent entities of the Russian Federation, where tariffs for the population are established using the social norm of consumption or differentiation by consumption. The measure will eliminate cross-subsidization, including for the sphere of gray mining. As of the end of December 2023, cryptocurrency miners are considered as individuals, the payment of electricity for which is subsidized. As a result, miners consume a large amount of energy at low rates.

Mining remains a zone that the state practically does not control in any way, while it has long taken shape in a decent industry that consumes large volumes of electricity, "says Andrei Tenishev, head of the competition law department at the M.M. Speransky IPiNB RANEPA.

The new measure is designed to solve the problem. Ilya Dolmatov, director of the Institute for Economics and Regulation of Infrastructure Industries at the Higher School of Economics, believes that the real effect of the introduction of differentiated tariffs will largely depend on what volumes of differentiation the regions will establish. In general, in the case of large volumes of electricity consumption, this approach will allow shifting the tariff burden to miners so that they pay more per kilowatt-hour. At the same time, experts emphasize, in the absence of a clear gradation of consumers, not only miners, but also ordinary people who have a larger number of electrical devices at their disposal will pay more.^[18]

The volume of industrial mining of cryptocurrencies in Russia has tripled in 3 years

The volume of industrial mining in Russia has almost tripled in 3 years and amounted to almost 2 GW by November 2023. The Russian market accounts for about 12% of the capacity of equipment for the extraction of cryptocurrencies.

As Kommersant writes in the issue of November 24, 2023, after the ban on mining in China and serious restrictions in this area in Kazakhstan, those wishing to mine cryptocurrency poured into Siberia due to the low cost of electricity there. As a result, there was a local shortage of electricity in this region. The actual level of consumption of mining farms in the Irkutsk region by November 2023 is 1.3 GW, of which 476 MW falls on one Irkutsk-Cheremkhovsky district. To fill the shortage of electricity by 2029, it is necessary to commission 1.23 GW power plants. Their cost, according to preliminary estimates, will be about 430 billion rubles, the publication says.

And since it will not be possible to solve the problem of deficit in an accelerated manner, the authorities apply the measures that are available to them. The Ministry of Energy believes that the increased tariffs will force miners to transport equipment to other regions.

Connecting a 10-megawatt farm in the Irkutsk region can cost its owner a couple of hundred million rubles, and additional costs on average and low voltage will amount to about 8 million rubles. Such calculations were given to Kommersant by employees of the Institute for Economics and Regulation of Infrastructure Industries of the Higher School of Economics, based on standardized rates.

The volume of illegal mining in the Irkutsk region, according to the publication, is measured at 260 MW, most of it is in the south of the region. The owners of legal crypto farms interviewed by the newspaper warn that the initiatives of the Ministry of Energy will only increase the volume of such mining, because conscientious players will move to the gray zone.^[19]

The authorities want to localize the production of "iron" for mining

Due to the illegal import of equipment for mining cryptocurrencies, the state budget does not receive about 7 billion rubles, said the first deputy head of the State Duma Committee on Security and Anti-Corruption Andrei Lugovoi (LDPR) on October 18, 2023 at a meeting of the expert council under the working group of the lower house on the legislative regulation of digital currencies, representatives of the press service of the deputy of the State Duma of the Russian Federation Anton Nemkin reported on October 24, 2023 with reference to Vedomosti. The most effective way to fight is to localize the production of equipment, the deputy believes.

Since no one needs this industry, no one thought about their own production. We spoke to the Industrial Mining Association (APM) and they are preparing to start production here. We also count on the help and support of the Ministry of Industry and Trade, - said Andrei Lugovoi.

In his opinion, mining for Russia is a young industry and equipment for this activity cannot always be recognized at customs. So, under various pretexts, it is smuggled into the country by gray and black miners without paying VAT.

In recent years, mining in Russia has been actively developing, said Anton Nemkin, a member of the State Duma Committee on Information Policy, Information Technology and Communications.

At the same time, the industry is still not regulated in any way from the point of view of legislation, since there is still no consensus on where this industry should develop and what we want to get from it in the end. Relevant departments are working on this issue. But nevertheless, the segment is gradually institutionalized: a recent example is the creation of its own association. This is a positive trend, especially in the context of the emergence of the market and the need to provide a consolidated position of the business of the authorities to adjust the course of regulation, - says Anton Nemkin.

The localization of production for mining in general can be considered through the policy of import substitution, the deputy noted.

Since we want to achieve import independence in many sectors of the economy, mining should not be excluded from here either. But you need to understand that this is not a matter of one day. In itself, mining equipment from the point of view of production is not characterized by complexity, it can be assembled from various components as well as personal computers. Much more important is the components of the equipment and, above all, microcircuits. Russian microelectronics for October 2023 is not ready to produce full-fledged mining chips that will compete with foreign products. Let me remind you that the program for the development of semiconductors that allow the production of such microcircuits is designed until 30 years, - explained Anton Nemkin.

The main thing for October 2023 is to consolidate the fact that the mining industry in Russia will be included in the import substitution policy, the expert said.

In the future, it is necessary to come to an understanding of what exactly will be meant by localization. For example, full-cycle production or product assembly only. But I note that such steps should be based on specialized regulation of the industry, which is still at the development stage, the parliamentarian concluded.

Ministry of Energy of the Russian Federation increases electricity tariffs for miners

On October 12, 2023, it became known about the upcoming increase in electricity tariffs for miners in Russia. The new differentiated tariff in energy-deficient areas will be in effect from 2024.

We think that from two to five times, or more, the increase should motivate the movement [of miners to energy development areas - approx. TASS], - said the deputy head of the Ministry of Energy of the Russian Federation Pavel Snikkars, answering a question from journalists how much it is proposed to increase the tariff. - We want to make a differentiated tariff for certain categories of consumers. That is, the differentiation of the tariff is possible, for this we will change the act of the government and provide this opportunity.

Previously Government of the Russian Federation , it allowed the regions the right to introduce differentiation of electricity tariffs for the population depending on the volume of consumption. Changes can affect a number of districts, and Buryatia. Trans-Baikal Territory In Irkutsk region these regions there is a significant part of mining farms. According cryptocurrencies to Pavel Snikkars, additional revenue can be directed to the implementation of the investment program "."Rosseti

For Russia, this is a precedent - before the payment for electricity never depended on the type of activity of a private person. The cost of a kilowatt may differ from region to region, as well as depend on whether the building is connected to the gas network, but there has never been such a time that the authorities force someone to pay more only because of the type of their activity.

To identify mining centers, the Ministry of Energy, according to the Kommersant newspaper, considers it necessary to create special commissions in the regions. Miners will be determined according to an even schedule of electricity consumption close to maximum capacity. The commission's specialists will travel and check the equipment in the premises of legal entities, as well as study Internet traffic and the list of visited sites of such companies.^[20]

More mining equipment arrives in Russia than in any other country

At the end of July 2023, it became known that the mining industry in Russia was gaining momentum against the backdrop of American and European sanctions. The Russian market receives more equipment for mining cryptocurrencies than any other country.

According to the resource Coindesk, mining equipment manufacturers, including Bitmain and MicroBT, are expanding their activities in the Russian market. Russia has always been among the leaders in the speed of hashing bitcoins, which is explained by the relatively low cost of electricity and a relatively cold climate. Moreover, the share of the Russian Federation in the global production of cryptocurrencies increased after China in 2021 completely banned activities in the relevant area. In the first quarter of 2023, Russia for the first time ranked second in the world in terms of mining volume.

It is noted that Western sanctions actually had a stimulating effect on the Russian cryptocurrency mining market. One reason is that mining provides an alternative source of income for power suppliers affected by the economic downturn. In addition, in the current geopolitical situation, it has become much more difficult to use the ruble in international transactions, but it can be easily converted into cryptotockens, which are accepted in all countries.

None of the sanctions against Russia completely prohibits mining activities. Nevertheless, there are significant risks for firms operating in this sector: they cannot do business with organizations under sanctions, including the mining hosting company BitRiver, or make payments to state-owned banks and companies. In addition, foreign structures leading cryptocurrency business in Russia, in the formed geopolitical conditions, may face reputational risks.^[21]

Russia climbed to second place in the world in cryptocurrency mining

According to the results of the first quarter of 2023, Russia for the first time ranked second in the world in terms of capacity used in the extraction of cryptocurrencies. The result was 1 GW, as stated in the BitRiver report, prepared in early April 2023.

According to the Kommersant newspaper, citing BitRiver data, the United States remains the leader in the global mining industry with an indicator of about 3-4 GW. The places from the third to the tenth are occupied by the countries of the Persian Gulf (700 MW), Canada (400 MW), Malaysia (300 MW), Argentina (135 MW), Iceland (120 MW), Paraguay (100-125 MW), Kazakhstan (100 MW) and Ireland (90 MW).

It is noted that until 2023 Russia held the third place in the ranking of the largest regions in the extraction of cryptocurrencies. In particular, according to the Cambridge Center for Alternative Finance, at the end of 2021, Russia was inferior to the United States and Kazakhstan in terms of capacity for mining bitcoin. However, due to the current geopolitical situation and macroeconomic challenges, there is a redistribution of the cryptocurrency market.

BitRiver experts associate the positive dynamics of the Russian Federation in the mining sector with the restriction of relevant activities in Kazakhstan and China due to a shortage of electricity. Several factors influenced the US market: a reduction in mining yields, the abolition of tax breaks, the actions of regulators and the crisis as a whole.

The growth of mining capacities in Russia is quite expected, since there are a number of areas that are the most profitable for the extraction of cryptocurrencies in terms of electricity prices. In these regions (Irkutsk Sverdlovsk both regions Krasnoyarsk Territory and others), in addition to the low cost of electricity, there is a "mining-friendly climate," which allows you not to spend additional funds on cooling equipment, - quotes "" Kommersant the words of EMCD Marketing Director Alisa Tsukanova.[22]

Russian mining companies collectively use 800,000 ASIC integrated circuits; Russia accounts for 15% of cryptocurrency production in the world

At the end of February 2023, it became known that Russian mining companies collectively use approximately 800,000 special-purpose integrated circuits (Application Specific Integrated Circuit, ASIC, bitcoin mining machines), the power of which exceeds 2.5 GW. At the same time, the Russian Federation accounts for about 15% of the global cryptocurrency mining market.

Vedomosti writes about this with reference to a survey of 20 organizations engaged in mining, hosting and distribution. At the beginning of 2023, the largest players participating in the distribution of batches of ASIC schemes from 30,000 units or having data centers from 20 MW took part in it.

800 thousand ASIC is about 15% of the world hashrate, the newspaper said. Most of the schemes are in the Irkutsk region (59%, or 470 thousand units). It is followed by the regions of the North-West (54 thousand) and North Caucasus (50 thousand) federal districts, says the director of RAKIBAlexander Brazhnikov.

At the same time, according to him, only last year the number of cars on the territory of the Russian Federation increased by about 60%. At least 100 thousand ASICs are in small miners with capacities of less than 1 MW, as well as in illegal market participants.

The association named GoMining, 3Logic Chilcoot, Pro-Miner, BitRiver, SibMain, Uminer and Intelion as the leaders among Russian organizations working legally.

BitRiver, the largest data center operator in Eurasia, estimates the total electric power consumed by mining in Russia at 1.3-1.7 GW. They say that this is approximately 464-607 thousand working devices, excluding those that simply lie in warehouses.

In turn, Kommersant wrote in January 2023 that the total capacity of Russian mining companies in 2022 amounted to only 500 MW.^[23]

Government begins subsidizing cryptocurrency mining in Siberia

The company Bitriver B"" as part of the construction Buryatia data center at a capacity of 100 MW began to supply equipment to the facility. In the first batch - a power transformer with a capacity of 125,000 kVA 220/10 kV. This was announced on February 8, 2023 in the press service of the Development Corporation Far East and (Africa KRDV). This center, as specified, will enjoy a wide range of benefits. More here.

2022

Russian cryptocurrency miners halve electricity consumption

Electricity consumption for cryptocurrency mining in Russia in 2022 amounted to 5 billion kWh against 9.3 billion kWh (a decrease of 47%). This is evidenced by the data of the Analytical Center (AC) of the Fuel and Energy Complex, which were released at the end of July 2023.

As they write Sheets"" with reference to the study of the AC Fuel and Energy Complex, due to "administrative limited measures," Russia's share in the world mining market decreased from a maximum of 2021 to 4.6% in 2022. In previous years, it has grown steadily: in 2019 it was 6%, in 2020 - 8%, in 2021 - 9%. According to the analyst of FG Finam"" Alexander Kovalev, by mid-2023, the share of mining in the energy consumption of the Russian Federation is around 2.5-3%, while the official estimate is slightly less than 1%.

AC TEK notes that commercial mining has become a serious problem for regions with inexpensive electricity, such as the Irkutsk region and the Krasnoyarsk Territory. At the same time, in other regions, the problem is local in nature and does not play a special role at the state level. Because of this, regulators face difficulties in planning capacity utilization, which inevitably affects the cost of electricity to other consumers.

The sharp increase in electricity consumption associated with the extraction of cryptocurrency entailed huge loads on the power grid. This led to direct losses for power engineers forced to buy electricity to cover unplanned demand, as well as to cases of breakdown of the relevant equipment due to overloads.

To resolve this issue, it is necessary to transparently regulate the activities of cryptocurrency miners and apply incentive measures, experts from the AC Fuel and Energy Complex say. This will help to remove miners from the gray zone, and then legalize, which, coupled with the differentiation of tariffs based on the volume of energy consumption, could correct the situation.^[24]

The Ministry of Energy named the share of mining in energy consumption - 0.6-0.8%

Ministry of Energy of the Russian Federation estimated at 0.6-0.8% the share cryptocurrency mining in electricity consumption in the country at the end of 2022. As the deputy head of the department noted, they Pavel Snikkars Russia began to mine less. cryptocurrency

Miners accounted for about 1% of national energy consumption in 2021, Snikkars said. By the end of 2022, the Deputy Minister expected a share of 1.5-2%.

It is much worse that in the absence of legislative regulation of this type of business, almost the entire mining load was concentrated in the Irkutsk, Buryat power systems, as well as the power system of the Trans-Baikal Territory. At the same time, the capacity free to connect to the network infrastructure was chosen, - the Ministry of Energy quotes Pavel Snikkars' response to Vedomosti's request. The [25].

This, according to the deputy minister, threatens to put on a long pause the implementation of new projects for the development of industrial production and housing construction.

According to the ministry, the increase in energy consumption in the Irkutsk region in 2022 amounted to 8.6%, which is higher than the dynamics of consumption in the unified energy system of Russia as a whole. At the same time, at least half of such an increase occurred due to the massive opening of cryptocurrency mining centers.

The fall in the share of miners in Russia is mainly due to the fact that they are under modernization - they replace obsolete equipment, said Stanislav Akulinkin, deputy chairman of the commission on mining activities and blockchain technology of the Chamber of Commerce and Industry and CEO of EMCD. In his opinion, this restructuring is temporary. The global picture of the value of cryptocurrency over the past few years shows stable growth, even despite the sudden drops in the bitcoin exchange rate, the expert added.^[26]

Miners in Russia consume 2-2.5 GWh of electricity per year

Miners in Russia consume 2-2.5 GWh of electricity per year, Interfax reported in February 2023. This is equivalent to 143 bitcoins and 170 million rubles a day or 5.2 billion rubles a month. Against the background of the fall in the cryptocurrency market, such dynamics were facilitated by a decrease in the cost of equipment and the interest of domestic customers.

By 2024, the volume of mining to the current exchange rate should grow to 200 million rubles per day.

Siberia needs new energy capabilities due to surge in cryptocurrency mining

Siberia needs new energy capabilities due to a surge in cryptocurrency mining. This was announced at the end of December 2022 by the head of the Ministry of Energy of Russia Nikolai Shulginov.

As for industrial mining, it is also growing, growing mainly in regions where the tariff is low. In these regions, there is an increase in consumption, and the growth is significant, which we must take into account when considering the development program scheme for the next period. And, most likely, it will not do without the construction of generation in the southeastern part of the combined energy system of Siberia, "he said in an interview with the Russia 24 TV channel.

According to him, the increase in electricity consumption by miners in Russia increases the load on the networks, so it is necessary to create conditions for legal mining. To regulate the consumption of electricity by miners, the government previously decided to introduce differentiated tariffs depending on the amount of energy consumption, Shulginov recalled. The first regions where a differentiated system of payment for electricity for individuals should be introduced (in everyday life the scheme was called the "social norm") within the framework of the new FAS methodology will be the Irkutsk region and Khakassia.

The biggest problems with the load on the networks due to mining in 2022 were observed in the Irkutsk region and Khakassia due to cheaper electricity for the population, says Aleksey Belogoriev, deputy chief director for energy management at the Institute of power and Finance. According to him, the construction of new capacities in these regions may be needed if mining volumes grow "very much."

It seems necessary to distribute costs more equitably between electricity consumers, legalize miners and conclude commercial energy contracts with them, adds Belogoriev. In his opinion, the legalization of mining will also create investment resources for the development of networks and, if necessary, for the construction of new capacities.^[27]

Theft of mining equipment in Irkutsk

A criminal case for theft of mining equipment was opened in Irkutsk. There, the entrepreneur rented an office and opened hosting for receiving mining equipment. His partner negotiated with miners, offering to host their equipment, promising cheap tariffs for electricity, maintenance and security. However, they simply sold all the equipment received, and divided the money - about 2 million rubles - among themselves. Fraudsters face up to 10 years in prison.

Demand for mining equipment has sharply increased in Russia

In Russia, the demand for mining equipment has grown sharply. On December 1, 2022, the Kommersant newspaper wrote about this with reference to distributors and industry experts.

The distributor Chilkoot sales of specialized computing devices ASIC for two months of the fourth quarter of 2022 exceeded the volumes for the entire third quarter of the same year, the company's development manager Artem Eremin told the publication. ASIC sales for the nine months of 2022 exceeded the figure for the entire 2021 by 65%, he added.

We work with legal entities and see that they began to buy 30% more equipment under one transaction than at the beginning of the year, - said Eremin.

For ten months of 2022, the demand for ASIC machines increased by one and a half times, confirm in. BitRiver The total volume of the mining equipment market cryptocurrencies is 3-5 billion rubles excluding double use of industrial computing power, estimates Anna Avakimyan, chief analyst at RegBlok.

The industrial mining market in Russia is benefiting from the current situation, said Vladislav Antonov, financial analyst at BitRiver. The demand for ASIC equipment in the large-wholesale segment increased due to a decrease in purchase prices: they became as close as possible to the cost of production, which is the best entry point for investments, the expert explains.

Chilkoot experts associate with the high demand for ASIC systems in the Russian Federation that purchase prices for this equipment have decreased. The organization explained that from August to October 2022, the cost of mining equipment fell by about 20%.

51ASIC co-founder Mikhail Brezhnev says that the situation for miners can further improve the appearance of used equipment on the market. Many mining companies that have not been able to optimize their own business processes may go bankrupt due to the situation in the crypto market, he added.^[28]

State Duma deputies rejected the bill on cryptocurrency mining

The State Duma rejected the bill on cryptocurrency mining, which was proposed in May 2022 by the deputies of the New People faction Anton Tkachev, Vladimir Plyakin, Grigory Shilkin and Sardana Aksentieva. This became known on October 20, 2022.

Lawmakers were confident that it was time to control the industry. As follows from the explanatory note, the Russians own more than 12 million cryptocurrency wallets, which contain about 10 trillion rubles. Russia is also among the world leaders in terms of "mining" capacities and ranks third in the world.

The lack of regulation of this industry leads to the fact that all operations with digital currencies, as well as their issue, are carried out in the "gray" zone, the deputies say. - In such conditions, citizens often face cases of fraud, lacking the tools to protect their rights and interests.

The bill was aimed at regulating activities in Russia, the result of which is the creation of a digital currency - mining itself.

The document also regulated the relations arising during mining, that is, the release or generation of digital currency in Russia, and put forward requirements for participants in mining activities. For example, according to the deputies, if the electricity consumed by individual miners exceeds the limits set by the Government, then citizens can conduct their activities only after registering as an individual entrepreneur or self-employed. It was proposed to impose taxes on mining operators.

From the negative response of the State Duma Committee on the Financial Market to the bill, it follows that it does not establish and does not provide for mechanisms for the controlled circulation of digital currency, which excludes the possibility of using technologies for anonymizing market participants. The document, as reviewers note, lacks information about executive authorities that would be vested with control and supervisory powers in mining issues.

Also, the bill provided for the use of cryptocurrencies as a means of payment in Russia. This is prohibited by the Constitution. The monetary unit in Russia is the ruble, the issue of other currencies is not allowed.

The May bill is not the only document regarding the mining of a group of deputies of the New People faction. In April 2022, lawmakers submitted the first version of the bill to the State Duma. It was more expanded, but the specifics, as experts note, did not add. In the future, the document was removed from consideration.

Larisa Peshekhonova, chief consultant of the Center for Distributed Register Technologies of St. Petersburg State University, previously noted the fragmentation and insufficiency of this bill. According to her, the document also contains only a few basic concepts and establishes the most general requirements for participants in legal relations related to mining^[29]

Oil fields account for 23% of mining in Russia

Russia More than mining farms operate at oil fields cryptocurrencies with a total energy consumption of 85 MW, which is 23% of the total capacity of mining centers in the country. Such data on August 29, 2022 leads "" Kommersant with reference to the study. Vygon Consulting

These farms consume electricity produced using associated petroleum gas (APG). The sale of part of the energy to cryptopherms is called the most profitable way to utilize associated gas. According to analysts, in July 2-22, the revenue of PNG miners in the Russian Federation reached 400 million rubles. And the projected annual income for the period from July 2022 to July 2023 is estimated at 4.8 billion rubles.

According to experts, the PNG mining market may grow several times. The optimistic scenario assumes that about a third of the total volume of flared associated gas can be redirected to mining.

The main problem is the Western sanctions already imposed against Russia, and analysts call the registration of a bitcoin mining farm in another country the exit. Although so far both new and used cars are entering the country, the path "has become longer legally and logically," says Roman Zabuga, co-owner of BWC UG. At the same time, the equipment is still much cheaper than in 2021. According to the expert, the installed capacity of PNG mining farms is about 30-40 MW. According to Roman Zabuga, investors have plans to implement large-scale projects with a capacity of 200 MW.

A farm with new equipment and free PNG pays off at a bitcoin rate of $21.6 thousand, according to Vygon Consulting. In the case of using already paid-off equipment and at a PNG price of 1 thousand rubles per 1 thousand cubic meters, the cost of production will be $12 thousand per bitcoin.^[30]

SBI Holdings closes mining business in Russia due to falling bitcoin exchange rate and risks due to conflict in Ukraine

In August 2022, it became known that the Japanese SBI Holdings will close the mining business in Russia due to the fall in the bitcoin exchange rate and the risks associated with the conflict in Ukraine. In April, the US Treasury Department imposed sanctions against BitRiver, an operator of data centers for mining.

The volume of electricity consumption for mining in Russia over five years has increased 20 times

The volume of electricity consumption for mining in Russia over the past five years has increased almost 20 times, Intelion Data Systems reported. The annual increase in energy consumption was at least 150% per year.

According to the calculations of the company's experts in 2021, the volume of electricity consumption only for Bitcoin mining (BTC) in Russia amounted to about 1.25 gigawatts. At the same time, the volume of electricity consumption for mining ETH, LTC and other cryptocurrencies, according to the company's specialists, can additionally amount to about 40-50% of the volume of electricity consumption for BTC mining.

According to estimates by various state institutions, the share of electricity consumption in the extraction of cryptocurrencies accounts for from 0.64% to 2% of all electricity consumption in Russia, which is comparable to the share of electricity consumption by the country's agriculture.

Robbery mining farm in the suburbs

In July 2022, a large mining farm was robbed from Domodedovo near Moscow. According to the guard, in the warehouse area "VkusVilla" in the village of Kuchino, the company "Social Construction Company" rented its corner. She surrounded him with a fence, hired three watchmen, began to mine bitcoins. The farm consumed electricity as a small village.

On July 16, four masked people climbed over the fence, tied up the watchmen with a pistol, carried out four containers with 100 mining devices and fled to GAZelle.

The revenue of Russian miners was estimated at $964 million

In 2022 to mining economic , interest in the world continues to gain momentum against the background of instability. Russia In this direction, it is also of interest, mining is becoming an increasingly popular way of earning money despite the fall in capitalization cryptocurrencies from $3 trillion to $1 trillion over the past 8 months. This became known on July 1, 2022. State Duma The next version of the mining bill has already been introduced, which is aimed at resolving relations related to the peculiarities of the release and generation of digital currency. Central Bank is also ready to agree to the legalization of mining, provided that miners will sell the proceeds outside of Russia. Experts from the Center for Innovation financial in the Sk Fintech Hub sector estimated mining revenue in 2022 in the world and in Russia, taking into account the current distribution of capacities between, the rate and countries share in the total bitcoin capitalization of cryptocurrencies. to data According to experts, the total revenue of Russian miners of all types of popular cryptocurrencies in 2022 will amount to approximately $964 million. Moreover, revenue only from bitcoin (BTC) mining in Russia in 2022 will amount to more than $410 million.

According to experts, in 2022, miners will receive 328.5 thousand as a reward. BTC, which will amount to $9 billion per year at the average annual exchange rate 1BTC=$27.5 thousand. Russian miners will be able to get about 15 thousand. BTC and earn on this more than $410 million for the entire 2022.

Bitcoin is not the only cryptocurrency on which miners earn. Data from the latest study by the Cambridge Center for Alternative Finance (dated May 17, 2022) show that the United States accounts for 37.8% of the world hashrate in the BTC network, China - 21.1%, Kazakhstan - 13.2%, Russia - 4.6%. In addition, the share of BTC in the total capitalization of cryptocurrencies is 43%. Taking into account these preliminary data, the total revenue of miners of all cryptocurrencies in Russia may amount to $626 million for the first half of 2022, and $964 million for the entire 2022.

According to the BitRiver mining farm in Russia, more than 300,000 people mine bitcoin in our country alone. Also at the beginning of July 2022. there is a tendency when mining in Russia becomes interesting not only to private enthusiasts, but also to industrial companies and the state, as a separate type of activity that can generate additional tax revenues to the country's budget.

From the point of view of mining, Russia is losing its leading position, in a few months the share of Russia in the total hashrate of the bitcoin network fell 2.5 times, and the bitcoin rate fell by 57% in 3 months. An active discussion of regulators on the legalization of mining, the introduction of digital assets and cryptocurrencies into circulation will definitely lead to a new stage in the development of all related technologies - cryptography, cybersecurity, blockchain, AI, fintech. The state can stimulate the development of the digital asset market and decentralized finances by giving clear rules to players and removing risks from technology entrepreneurs and users. For July 2022, the problem of cross-border transfers and payments can be solved by gradually introducing rules for the turnover of digital assets. So far, unfortunately, crypto assets mined in the mining process are exchanged on foreign exchanges or on "gray" sites, bringing income to other countries and exposing Russian entrepreneurs and investors to tax and legal risks, said Pavel Novikov, director of Sk Fintech Hub.

The decline in mining in Russia due to the decline in the bitcoin exchange rate and the sharp strengthening of the ruble

Miners began to massively sell video cards for cryptocurrency mining on Avito amid a fall in the bitcoin exchange rate.

In mid-June 2022, this digital currency fell to $18,707. The cost of bitcoin fell below $19 thousand for the first time since the end of November 2020. The first cryptocurrency in the world has been falling in price since June 6, 2022. Then it traded above $31 thousand.

In June, the market collapsed compared to March - April by about five times. One of them noted that due to expensive electricity, some players went to zero or mine themselves at a loss.

Prices for video cards also fell. From March - April, the decline was three times. For example, Nvidia a GeForce RTX 3090 card can now be bought on Avito for 170 thousand rubles, and three months ago up to 540 thousand rubles were asked for it.

Gazprom Neft engaged in the extraction of cryptocurrencies in oil fields

In mid-June 2022, Gazprom Neft and BitRiver signed a memorandum of cooperation in the field of cryptocurrency mining. Read more here.

The share of mining in the energy consumption structure of Russia exceeded 2%

The share of mining in the energy consumption structure of Russia exceeded 2% - this is more than agriculture consumes.

A project on the rules of cryptocurrency mining has been submitted to the State Duma

On May 1, 2022, it became known that a project on the rules of cryptocurrency mining was submitted to the State Duma. Information about the document appeared in the database of the lower house of parliament.

The document defines cryptocurrency mining. It means activities using the information infrastructure of the Russian Federation and user equipment located in the country, the result of which is the creation of a digital currency.

The bill provides for the creation of a register of mining participants. Individuals will be able to engage in mining by registering as self-employed or individual entrepreneurs if the electricity they consume exceeds the limits set by the Russian government.

The mining operator keeps records of the generated digital currencies and is not responsible for checking the source of the funds.

It is specified that the peculiarities of taxation of mining operators are established by the legislation of the Russian Federation on taxes and fees.

Those mining participants who register in the Russian register will receive the right to an annual amnesty for customs clearance of equipment and VAT payment for mining^[31] for ^[32] has^[33].

Belarusian mining equipment manufacturer AtomMining opened an office in Russia

In mid-April 2022, the Belarusian manufacturer of equipment for mining AtomMining announced the opening of a representative office in. Russia The company, as it claims, will become one of the first suppliers of equipment for mining cryptocurrencies on the Russian market when mining is legalized in the country. More. here

The Ministry of Industry and Trade proposed to oblige the use of Russian mining equipment

Ministry of Industry and Trade proposed to oblige to use equipment for mining cryptocurrencies to the country the Russian if it is available and available on the market. This became known on April 6, 2022. The agency believes that this will help "level the risks." information security This is stated in the response of the head of the department to the Denis Manturov proposals of the deputy State Dumas Anton Gorelkin ("").United Russia

To mitigate information security risks, it is proposed to establish a legislative requirement on the predominant use of Russian hardware and software systems, radio-electronic products and software, if available and available on the market, for industrial production ("mining") in the territory of the Russian Federation cryptocurrency assets, the source said.

The deputy presented a package of proposals for regulating the cryptocurrency market in Russia. Mr. Manturov replied that the Ministry of Industry and Trade is discussing with the Central Bank (Central Bank) and several other departments "approaches to regulating the issue and circulation of digital currency." The Ministry of Industry and Trade and the Ministry of Construction, in particular, proposed introducing an experimental legal regime for mining. The requirements for the use of Russian equipment only are also discussed.

Thus, the Ministry of Industry and Trade responded to a package of proposals for regulating the cryptocurrency market in the Russian Federation, compiled by Gorelkin following the results of the March round table, of which he was the moderator, at the EP site. As noted in Manturov's letter, the ministry as a whole considers these proposals "relevant and supports the party's initiative to work with them,"^[34].

Bitcoin mining cost $16,130

300 thousand cryptocurrency miners counted in Russia

By January 2022 Russia , there are about 300 thousand individuals and legal entities that are engaged in mining. cryptocurrencies This is evidenced by the operator's data. data centers BitRiver

The company's analysts estimate the total average mining revenue in Russia at about $1.5 billion per year. Miners of ether, monero and other cryptocurrencies earn another $2.5 billion. According to experts, if you charge income tax or personal income tax on cryptocurrency transactions when transferring income tax or personal income tax to fiat funds, then on average more than 50 billion rubles will be received annually in the consolidated budget of Russia in the form of income.

The Center for Alternative Finance at Cambridge University has included Russia in the top three countries for bitcoin mining: by the beginning of 2022, the country accounts for about 11% of the total cryptocurrency mining capacity.

Russia has become an attractive country for mining due to the low price of electricity and surplus capacities, which are estimated at 38-60 GW, said Alexander Brazhnikov, executive director of the Russian Association of Crypto Economics, Artificial Intelligence and Blockchain (RAKIB).

According to BitRiver analyst Vladislav Antonov, the most important criteria for mining cryptocurrency include the presence in the country:

• state regulation of cryptocurrency and blockchain. Laws should primarily protect miners who invest in expensive equipment;
• associations in the field of digital and crypto-economics;
• specialized data centers (data centers) for mining, allowing mining on an industrial scale;
• preferential taxation for miners and developed infrastructure;
• excess and "green" electricity at low cost;
• cold climate in the territory where the mining infrastructure is located;
• stable internet;
• qualified personnel for service maintenance.^[35]

Decline in demand for mining equipment in Russia

In January 2022, due to the fall in the bitcoin exchange rate and threats to ban mining in Russia, the number of offers to sell mining equipment and video cards increased, while demand for it decreased. A noticeable decrease in demand for video cards was recorded in Marvel Distribution, one of the largest Russian distributors of technology.

The number of advertisements for the sale of mining farms increased by 18%, and the demand for them decreased by 9% compared to December 2021, and in the week after the Central Bank report - by 15% compared to January 12-19. The average cost of a mining farm was 555.45 thousand rubles.

The number of ASIC listings increased by 17%, and they searched for it 27% less often. After January 20, demand fell 18% compared to the week before the report. The average check for this product amounted to 241.83 thousand rubles.

USA, Kazakhstan and Russia lead the mining market

In January 2022 Kazakhstan , it ranked third (13%) in terms of the share of the hashrate of the largest in terms of capitalization cryptocurrencies Bitcoin after and. USA China Russia was in 6th place.

2021

Revenue from bitcoin mining in Russia increased 18 times

The dynamics of activity growth the Russian miners over the past 5 years demonstrates significant results. So, according to the calculations of the company's experts, Intelion Data Systems in four years, mining revenue (bitcoin BTC) by Russian miners has grown more than 18 times - from 7 billion rubles in 2017 to 128 billion in 2021. Representatives of Intelion Data Systems announced this TAdviser on October 21, 2022. According to their estimates, the increasing dynamics retained its forward vector even during the periods of crisis years, demonstrating stable growth.

Since 2017, when we can talk about the beginning of the explosive popularization of this line of business in Russia, the revenue of Russian miners both during the ups and downs of bitcoin and its drops has grown at an impressive pace. This trend is confirmed by data on the volume of revenue received from BTC mining in Russia from 2017 to the present day [October 2022. note - editorial office], - said in a message from Intelion Data Systems.

Despite a fairly confident start to 2022, the total revenue from BTC mining in Russia in the first eight past months decreased to a little more than 57 billion rubles. If we take into account that experts already call the second quarter of 2022 the worst in 11 years of observation, and the BTC hashrate coming from the territory of the Russian Federation is officially decreasing, the annual turnover rate from mining may transform into approximately 85.59 billion rubles, experts predict. This will be the first period in five years when the volume of annual revenue compared to the same period will decrease. The explanation for such a decline, according to Intelion Data Systems, is the several negative factors that have developed against cryptocurrency at once - the economic crisis, the fall in Bitcoin, sanctions and the strengthening of the ruble against the dollar.

"Over the past years, we have seen a tremendous increase in revenue from cryptocurrency mining and consider this as a potential growth point for the Russian economy. The functioning of this promising area, the potential for expansion of which is huge, can greatly affect the improvement of economic indicators. This will not only help the deployment of its own IT infrastructure for various purposes on the territory of the Russian Federation, which in the future can be used for any energy-intensive computing, but will also allow attracting investments in energy expansion regions of the country, stimulating the development of related industries and increasing employment, "says Timofey Semenov, CEO of Intelion Data Systems.

The volume of imports of equipment for mining bitcoin to Russia has grown 9 times

At the end of 2021, the volume of imports of equipment for mining bitcoin to Russia in value terms increased 9 times compared to 2020 and amounted to more than 38.3 billion rubles. In 2022, growth continued, and in the first 2 months the volume of imports amounted to about 18.5 billion rubles, which is almost 50% of the total volume of imports of similar equipment in 2021. Intelion Data Systems (Intelion Mine, Intelion Mine) announced this on March 30, 2022.

One of the reasons for the increase in imports is due to the shutdown of the placement of equipment for the extraction of cryptocurrencies in China. After that, some of the equipment previously used in China was relocated to other countries, including Russia. An additional argument to the increase in imports of mining equipment in the Russian Federation was the low price of electricity, due to significant volumes of electricity production in Russia, as well as the cold climate, which reduces the cost of operating the equipment.

Шаблон:Quote 'author=said Timofey Semenov, CEO of Intelion Data Systems.

At the end of March 2022, Russia lacks a legislative framework regulating activities in the field of cryptocurrency mining. The introduction of rules for regulating legal and environmentally friendly mining could bring considerable benefits to the Russian economy, provided that a fair and balanced approach to the regulation and taxation of this industry is applied.

The most optimal solution in the legalization of the industry may be the transfer of mining to an industrial format, to specialized mining, Data centers which are operated by mining operators. Construction DPC on the territory RUSSIAN FEDERATION will allow you to deploy your own IT infrastructure for various purposes, which in the future can be used for any energy-intensive calculations, as well as increase budget revenues.

Шаблон:Quote 'author=noted Timofey Semenov, CEO of Intelion Data Systems.

Cryptocurrencies worth up to $3 billion mined in Russia

In Russia, in 2021, according to the most crude estimates, cryptocurrencies worth up to $3 billion were mined, Ton reports.

Sales of mining equipment in Russia soared 14 times

Sales of mining equipment in Russia at the end of 2021 soared 14 times. Such equipment is in greatest demand To Moscow in St. Petersburg. He wrote about this in mid-December 2021 Kommersant with reference to the data "."Avito

On this site, the demand for specialized energy-efficient systems for cryptocurrency mining (ASIC) increased 14 times compared to 2020, the supply - 13 times. On Ozon, unit sales of goods for the extraction of cryptocurrency increased 13 times, and in monetary terms - almost 14 times.

In the Russian market in 2021, there was also a shortage of video cards for mining, which is why prices for them increased. For ten months of 2021, the video card market grew by 129.6% in cash, analysts say, says Marvel Distribution business analyst Anton Fomin.

According to him, the difficult situation in the video card market will continue as long as crypto farms bring good income: by the end of 2023, the deficit is unlikely to disappear, but the time lag in supplies is accurately minimized: from 48-50 weeks to 10-14 weeks.

According to the Center for Alternative Finance at Cambridge University, Russia is one of the world leaders in terms of computing power in the bitcoin network.

Earlier, the head of the Duma committee on the financial market, Anatoly Aksakov, proposed introducing mining into the All-Russian Classifier of Economic Activities (OKVED), which will tax this activity and provide miners with electricity at prices for industrial consumers.

The total volume of legal mining in specialized centers by the end of 2021 is about 600-700 MW, and soon it will approach 1 GW, according to estimates by the president of the TsODIgorya Dorofeev Association. BitRiver predicts market growth to 2-2.5 GW (1% of the installed capacity of the Russian Federation) in 2022. ^[36]

US, Kazakhstan and Russia lead in bitcoin mining

Russia has increased its share in global bitcoin production from 6.8% in June to 11% in September 2021. The country ranks third in the world, according to data from the University of Cambridge business school. The world leader in bitcoin production is the United States with a share of 35.4%. In second place is Kazakhstan with a share of 18.1% (+ 10 pp compared to June).

The high positions of Kazakhstan and Russia may be associated with the relocation of miners from China.

Giant migration of miners from China to Russia

Russia has become the largest recipient of cryptocurrency mining devices from China after the ban on mining in the Celestial Empire.

The Russian mining hosting BitCluster company accepted over 5,000 devices within a few weeks after the ban on mining in, and China BitRiver claims that over the past months it has placed 1.8 million miners from China. The company had to reject the offer of a client who wanted to bring another million devices. Many are running out of space.

Migration of miners from China to the Irkutsk region

Russia's Siberian region, known for its cheap electricity, warned in October 2021 that the migration of Bitcoin miners from neighboring China could overload its power grid after Beijing imposed restrictions on cryptocurrency mining.

Retail electricity consumption in the Irkutsk region this year increased by 159% compared to the level of 2020 due to the "avalanche" of underground cryptomining.

In November 2021, the Irkutsk region continued to be the capital of bitcoin mining. Thieves switched from car thefts to equipment. According to the Ministry of Internal Affairs of the Irkutsk Region, since January, more than 250 thefts of cryptocurrency mining equipment worth 76 million rubles have been committed in the region. Robbers walk around garage cooperatives and listen to where the noise is. Large farms are guarded by the Russian Guard. And for information about thieves in telegram chats offer several million rubles.

Russia took 4th place in cryptocurrency mining

In July 2021, the Center for Alternative Finance at Cambridge University published a study reporting that Russia and Kazakhstan have significantly added to global bitcoin mining.

According to experts, by April 2021, China accounted for less than half of the 46% of the capacity used to extract bitcoin, which is significantly less than 75.5% in September 2019. And this is before the authorities ordered restrictions on the extraction of cryptocurrencies.

Growth in demand for video cards in the Russian Federation after an increase in the price of bitcoin

As it became known on January 18, 2021, the Russians began to buy up video cards after the growth of the bitcoin rate. Moreover, computer components used in the extraction of cryptocurrencies do not even get to stores - batches in the amount of 1000 pieces are purchased directly from suppliers. Read more here.

2020

Fire of a residential building in St. Petersburg due to a mining farm

On November 24, 2020, a fire occurred due to the work of a mining farm in a residential building in the Petrograd district of St. Petersburg. This is not the first such incident in Russia.

According to the publication 78.ru with reference to the press service of the Ministry of Emergency Situations in St. Petersburg, at 22:13 on Tuesday, November 24, a message was received about the fire of a seven-room communal apartment in house number 36 on the embankment of the Karpovka River. Four pieces of equipment and 16 personnel arrived at the scene. After 40 minutes, the fire was extinguished.

According to the source of the publication, emergency services, as a result of the incident, the 35-year-old landlord was hospitalized with burns to his hands, back and neck. The victim assembled a farm for mining cryptocurrency, the work of which led to a fire. The owner of the "farm" did not provide for a cooling system, the portal said.

During the operation of such devices, a huge amount of heat is generated, which is often the cause of fires. Earlier in Novorossiysk, one of the apartments caught fire in a residential building due to the fact that its resident launched equipment for mining bitcoins in it. As a result of mining, the wiring could not withstand the load, and a short circuit occurred. No one was injured in the fire.

In addition, a fire broke out in the Puteets garage and construction cooperative in Vologda. According to the press service of the local Ministry of Emergency Situations, the cause of the fire was equipment for the extraction of cryptocurrency. During the analysis of the room, servers and other components of the mining farm were discovered.

The load of mining equipment on the power grid is serious. For example, a single miner such as the Antminer T9 consumes up to 1690 watts of power. Per day - 40.56 kW * h. With an electricity price of 3.5 rubles per kilowatt-hour, the costs will amount to 14.96 rubles per day. This is 4259 rubles per month or 51,815 rubles^[37]

BitRiver and En + Group create a mining farm in Siberia

On November 5, 2020, the aluminum and electricity En+ Group producer announced the creation of a joint venture with the operator of the bell center. mining cryptocurrencies BitRiver The partners agreed to develop projects in the field of cryptocurrency mining using renewable energy. More. here

A large mining farm is being created in Norilsk

In mid-October 2020, the industrial operator mining BitCluster announced its launch data center in Norilsk. Mining was organized there cryptocurrencies using 150 Antminer S19 farms. More. here

Surge in sales of video cards for mining in the Russian Federation

In the summer of 2020, Russia experienced a gigantic surge in demand for video cards for cryptocurrency mining, which is primarily due to the massive transition to remote work in the context of the COVID-19 coronavirus pandemic. Read more here.

2019

Bloomberg spoke about Deripaska's largest energy crypto farm in the CIS

The agency Bloomberg visited inside data center Bitriver and on November 24, 2019 shared information about the "largest crypto farm in the CIS," created at the data center's facilities. Formally, it is not Bitriver engaged in mining, but provides its capacity for rent to everyone. The data center was opened in 2018, but has already managed to attract customers from all over the world, including, and. USA China Japan More. here

The owner of a mining farm in Primorye burned down the apartments of neighbors

On November 21, 2019, it became known that a resident of Primorye used a mining farm to mine cryptocurrency and accidentally caused fires in neighbors' apartments. The cause of the fire was a heavy load on the power supplies caused by the work of the mining farm.

According to reports, the MINISTRY OF INTERNAL AFFAIRS RUSSIAN FEDERATION attacker made an illegal redevelopment of the attic of a residential building and placed a mining farm there. All equipment was connected simultaneously to at least 15 power supplies, heavily loading the electrical system. Due to many hours of continuous operation of the farm, a short circuit occurred, which led to a fire in the attic. As a result of rubles the fire, seven apartments with a total value of about 30 million were completely burned down, and general property worth more than 23 million rubles was damaged. In total, the damage from the actions of the attacker amounted to about 53 million rubles.

Having discovered the fire, the attacker disappeared without reporting the incident to emergency services.

The criminal case was sent to the Artyomovsk City Court for consideration. The man is accused of destroying property by negligence^[38].

Cryptocurrency will be mined at the Rusal plant, closed due to sanctions

At the end of October 2019, it became known that the Rusal plant, closed due to sanctions, would be used to mine cryptocurrencies. Mining equipment at the enterprise to place the Russian Mining Company (RMC), created with the participation of Internet Ombudsman Dmitry Marinichev. Read more here.

How a Russian supplier of mining equipment hid $1.2 million when 6 thousand computers were imported into the country

At the end of July 2019, it became known that the Russian Federal Customs Service was conducting an investigation into the alleged non-payment of customs duties for the import of mining equipment. The Russian company DTPK sheltered $1.2 million when importing more than 6 thousand computers. Read more here.

Miners in Russia admitted to multimillion-dollar losses

Miners, despite the growth of the bitcoin exchange rate, admit to the unprofitability of their business due to the high volatility of cryptocurrency and the increase in prices for mining equipment. Mining farms, according to some market representatives, are turning into "zombie startups": they bring money, but the income is lower than planned^[39].

As the founder of RocketBounty Pyotr Kandaurov said in July 2019 during the TerraCrypto 2019 forum, in 2017 he decided to invest in mining.

"For 250 thousand rubles I bought an Asic S9 for mining bitcoins, put it in my apartment. The equipment was very noisy, so it was necessary to make noise insulation. Bitcoin grew, and I decided to scale, found partners and began to create my own mining farm. I thought I would supply the equipment and receive passive income, "the miner said.

According to him, in fact, more efforts should be invested in mining than in trading, and passive income will not work.

"Mining revenues depend on the bitcoin rate, which is constantly jumping. The risks in this business are high, the same as in trading, "said Peter Kandaurov.

He added that after the launch of the mining farm, the bitcoin rate began to fall, besides, a fire broke out on the farm.

'The farm didn't make any money - it was more of a hobby. However, it then became a 'zombie start-up' - a project that brings something, but not what was expected of it. Such a project takes money and time, but it is a pity to leave it, since a lot of effort was invested in its development, "the miner emphasized.

In conclusion, he drew attention to the fact that all mining farm investors eventually lost about $10 million.

Russia may introduce administrative responsibility for cryptocurrency mining

On June 10, 2019, it became known that it State Duma plans to introduce administrative responsibility for any actions with that are cryptocurrency not provided for by Russian law. As of June 10, 2019, Russian laws do not regulate the treatment of, " bitcoin ether" and other types of virtual currency.

In other words, the State Duma initiative implies responsibility for everything that can be done with cryptocurrency - according to the head of the State Duma Committee on the Financial Market Anatoly Aksakov, all actions with cryptocurrency will be considered illegitimate - mining, organization and issue, circulation, opening exchange points, etc.

Aksakov suggested that the law "On Digital Financial Assets," developed to regulate any actions with cryptocurrency in Russia and submitted to the State Duma in March 2018, could be adopted by the end of June 2019.

The punishment for miners and everyone who is somehow connected with cryptocurrencies will be a fine, the size of which was not established as of June 2019. It is noteworthy that the Russians will still be allowed to own binkoins, but only as an exception - there will be no fine for them only if cryptotockens were purchased under foreign law at foreign exchange and sale points. A similar action carried out on the territory of Russia will inevitably entail administrative responsibility.

Anatoly Aksakov stressed that in the foreseeable future, bitcoin and other cryptocurrencies may again become popular in Russia. In the world market, bitcoin really "took off": its value after a series of deafening falls throughout 2018 (in February 2019, it even set a world anti-record for the number of days of depreciation) in the spring of 2019 began to grow and overcame the $8500 mark, after which it slightly decreased. As of June 10, 2019, the exchange rate of the world's main cryptocurrency, on which the value of most modern cyber coins depends, was $7,730.

The reasons why punishment for mining may be introduced in Russia are not officially disclosed. This may be due to the fight against terrorism and money laundering - according to Aksakov, the law "On Digital Financial Assets" was postponed in 2018 due to the requirements of FATF, the Financial Action Task Force against Money Laundering.

FATF belongs to the category of intergovernmental organizations. Its functions include the fight not only against the laundering of proceeds of criminal activity, but also against the financing of terrorism. Recall that all transactions carried out on the blockchain network are anonymous, and it bitcoin is almost impossible to calculate the real identity of the wallet from a technical point of view.

While the Russian authorities are struggling with this type of earnings for Belarus Russians, the decree "On Development" was adopted, digital economy which legalized the existence and use of cryptocurrencies in the country. The document, signed by President of Belarus Alexander Lukashenko in December 2017, gives individuals the right to own coins, as well as exchange them for Belarusian or foreign currency or electronic money.

Also, ordinary citizens of Belarus can give and bequeath coins to each other, as well as engage in their mining. Moreover, according to the decree, mining is not considered entrepreneurial activity and will not be taxed. In other words, mining in Belarus is officially legalized, and all those who want to make money on cryptocurrency are now entitled to significant tax benefits^[40].

AlfaStrakhovanie client faked theft of bitcoin farm for insurance payment

On January 28, 2019, it became known that the client AlfaStrakhovanie"" appealed to the company with a statement about the payment of insurance compensation in the amount of 5.5 million rubles. for the components allegedly stolen from his apartment computer. Upon closer inspection, it turned out that in such a cunning way he was trying to get rid of the bitcoin farm. Thanks to the actions of the police, the Volgograd region fraudster was convicted of staging a robbery and prevented fraud.

The man said that two unknown persons attacked him, beat him, used a stun gun and later stole property worth 5.5 million rubles from his apartment. - video cards, power supplies, processors, memory cards, motherboards, etc., a total of 142 names. Previously stolen computer components were insured at AlfaStrakhovanie.

Having carried out a set of necessary operational-search measures, employees of the Investigation Department No. 6 of the Investigation Department of the Ministry of Internal Affairs of Russia in Volgograd convicted the applicant of deliberately false denunciation.

It turned out that the man rented an apartment, staged a robbery attack on himself, as well as the theft of property in order to illegally receive compensation from an insurance company. The accomplices of the fraudster, whom the man paid a small amount, were detained in Moscow a little later.

A criminal case was opened against the fraudster, his accomplices are already giving confessions.

2018

Russians sell mining farms

The supply of farms Russia in November 2018 exceeded the January figures by more than three times. This was TAdviser reported in the company "Avito" on November 28, 2018 following the analysis of the Russian mining farm market, as well as video cards. As the study showed, their average cost since the beginning of the year has decreased by 23% and amounted to 132,639, and rubles demand (the number of requests for sellers' contacts) - by 73%. At the same time, the number of farm offers for mining in November has practically not changed compared to October, however, due to the fall in the exchange rate, bitcoin one can expect an increase in the number of advertisements for the sale of such equipment and a decrease in its cost by the end of the year, experts say.

The number of advertisements for the sale of mining farms and video cards on November 19 and 20 relative to the average for the entire month remained unchanged (fluctuations of about 1%), and the fall in bitcoin practically did not affect the offer. But the supply of farms in November 2018 is more than three times higher than in January.

According to Avito representatives, there may be several reasons: firstly, technological improvement of the production of mining devices and faster entry into the market; secondly, in the long term, farm owners could be disappointed in the extraction of cheaper cryptocurrency and decided to get rid of the equipment that had become superfluous.

Avito explains the decrease in the average cost of mining farms by 23% by an increase in supply, a drop in mining profitability and, in general, the disappearance of the areole of uniqueness: the farm has ceased to be a technological miracle and is becoming a familiar device.

Meanwhile, researchers recorded a drop in interest in mining farms back in January 2018, and the decline continued in November. The minimum interest in mining farms was recorded on November 25 - 24% lower than at the beginning of the month. And the peak fell on November 6 - 123%. The current trend in demand for mining farms is obviously due to a decrease in the bitcoin exchange rate on cryptocurrency exchanges, experts say.

The number of professional miners among Russians is growing

Mining ceased to be the lot of only amateur enthusiasts collecting farms on balconies, and finally took shape as an independent area of ​ ​ professional activity, according to the results of the study, the analytical center of the Gorbushkin Dvor shopping center reported on August 6, 2018. During it, sellers of mining equipment and computer components presented in the hypermoll were interviewed. It turned out that both the structure of demand has changed - professional players and regular customers make purchases much more often, and the mining approach itself - farms are not installed in residential buildings and offices, but in specially prepared premises.

The number of mining companies in Russia is constantly increasing. Experienced investors from other areas came to the market, ready to invest large sums and play "for a long time," - said Vladimir Isaev, managing director of the Gorbushkin Dvor hypermoll. - In addition, former amateur miners have reached the professional level. Many of them, having started their business during the mining boom in mid-to-late 2017, are steadily expanding and regularly buying new equipment.

In general, the data of the survey conducted by analysts of the Gorbushkin Dvor shopping center indicate that the volume of demand has stabilized. However, now the equipment is purchased not for home mining, but for installation in mining hotels - premises where for a fee anyone can install their own equipment and not worry about the quality of the Internet, fire safety, possible overload of the energy network, payment of electricity bills and other issues arising from home mining.

Despite the enlargement of the market and the fall in the value of cryptocurrency, there is still a good enough time to enter the mining market, analysts say. After the rush of demand, when the value of ASIC miners was measured in thousands of dollars, their price decreased several times. So, for example, at the beginning of 2018, Antminer S9 could be purchased for 200-250 thousand rubles. According to August, its price fluctuates around 60 thousand, while the average yield it demonstrates is about 10% per month. Farms have similar indicators on powerful video cards configured to mine Ethereum.

Russians lose interest in mining

In early July 2018, it became known about the fall in demand for mining equipment in Russia. The main reason for the decline is the fall in the bitcoin exchange rate, an increase in the complexity of mining cryptocurrencies and the associated decrease in mining profitability.

According to Kommersant, citing a study by the Yula free classifieds service, in the second quarter of 2018, users purchased a third less professional equipment for mining cryptocurrencies than three months earlier.

The conclusions were made on the basis of counting the number of ads closed in connection with the purchase. Absolute figures were not disclosed by the service, it is known that we are talking about thousands of ads. According to Yula for April-June 2018, the leaders among the cities where equipment was most put up for sale were Moscow (31% of ads), St. Petersburg (11%), Novosibirsk (4%), Yekaterinburg and Krasnodar (3% each).^[41]

Accordingly, prices fell in demand, the cost of finished mining farms fell by 40%. The number of AntMiner (one of the most popular miners for cryptocurrency) sold by ASIC has halved while halving the price. Users searched for video cards one and a half times less often than in the first quarter. The number of requests for the word bitcoin has decreased by 2.2 times.

It is noted that even a two-fold decrease in prices for special equipment is not yet able to correct the situation. The decrease in interest in the topic of mining is also due to the tightening of Russian legislation in the "digital" sphere.

Over the past six months, the complexity of mining has grown significantly and requires more and more computing power, and the cost of bitcoin, on the contrary, is falling and shows some of the lowest indicators over the past year, - Dmitry Lazarichev, co-founder of the crypto bank Wirex, told the publication.

RAKIB will prepare a legislative, tax and technical framework in the field of control and licensing of mining hotels and data centers

The emergence in the near future of legislated requirements for mining hotels will raise issues of licensing and control of the activities of this kind of premises. There will also be a question of taxes, since mining hotel revenues will only increase as demand for token issuance grows during numerous ICOs.

To prepare the legislative, tax and technical base in the field of control and licensing of mining hotels and, a data centers special committee will be organized, which will be headed by the vice president RAKIB of mining and. software Alexander Abramenko

The main tasks of the committee's work in the Russian Association of Cryptocurrencies and Blockchain will be to prepare a legislative and tax framework, form security standards, assess technical compliance with standards and certify mining hotels and data centers.

Mining hotels are the name for a specially equipped space where the owner of the mining equipment pays for its accommodation. Interest in such "hotels" only from January to May 2018 increased 9 times.

The service of placing equipment in specialized premises is becoming more and more popular, since an ordinary apartment is not suitable for this purpose: due to the size, high electricity consumption, high heat transfer and significant noise level.

Customers are forced to make high demands on such hotels. They must have software, be well ventilated, dry, have a stable power and telecommunications channel, and be protected from fire. These rooms are at least 100 sq.m., with a backup power supply, a "cold corridor," an emergency fire extinguishing system, 24/7 security and maintenance.

It is now becoming more expensive and more inconvenient to engage in the extraction of cryptocurrencies in apartments due to the constantly growing requirements for equipment: high electricity consumption, high heat transfer, strong noise, and so on. In this regard, as the legal field develops, it is likely to have appropriate definitions for mining. One of the concepts related to the production of tokens can be mining hotels - premises with special equipment, to which certain requirements must be made.

On the basis of RAKIB, a competence center will be created, contacting which miners or potential miners can receive all the necessary information about certified mining hotels or data centers of a particular region, which will help make the right choice, this will positively affect the income of market participants.

Russian miners rushed to Asia to buy equipment

In February 2018, the largest Asian electronics markets were flooded with customers looking for low-cost mining equipment. Among them are many Russians.

A huge number of miners from around the world go to Hong Kong or Singapore for equipment that Asian craftsmen collect. Some miners buy only individual components: motherboards, GPUs, fans, power adapters and memory cards. Even taking into account the markup that sellers make, these are very good deals for miners.

In Hong Kong, mining equipment is 30-50% cheaper than in Europe, thanks to a lower income tax and a decrease in the number of intermediaries, "explained Russian miner Dmitry Popov.

Popov himself buys motherboards and power supplies in Hong Kong, and mines in Russia - here electricity is cheaper, and the climate is more favorable, he notes. Reuters

The demand for mining equipment has expanded the contingent of buyers of Asian electronics markets. If earlier they served mainly local residents, now they meet foreigners with open arms. Hong Kong sellers claim that most buyers come from Russia, but in addition to Russians, they have customers from Western Europe, Africa and South Korea. Singapore usually provides miners from neighboring countries, but also deals with buyers from Vietnam, Malaysia, Indonesia and Russia.

Foreigners come to Singapore as it allows them to avoid working with middlemen and as they trust Singapore as a country, says a consultant at a mining equipment store. He also added that some of his buyers are under the age of 16 and come with their parents.

On average, mining pays off in about three months. But this mainly applies to large businessmen, those who work from home will have to wait much longer.

Mining equipment is mainly produced in China using chips from Advanced Micro Devices (AMD) and Nvidia. However, demand in recent months has grown so much that it exceeded supply, and miners went in search of equipment in other countries, explained Grant Mak of C. Base Computer.

Manager of one of the stores of Wisetek Digital Technology Co. Jerry Wu said that selling mining equipment is one and a half times more profitable than components for computers.

While miners are trying to find cheaper equipment by reducing the number of intermediaries, chipmakers see this as an opportunity to earn extra money. Samsung Electronics, the world's largest microchip maker, said "explosive" demand for GPUs used in mining was driving new growth in microchip sales.

We expect the share of customers from the cryptocurrency industry to increase sharply in 2018, "Lee Sang-hyun, Samsung vice president, said during a conference call.

Taiwan-based Advanced Semiconductor Engineering predicted demand for microchips would soar in 2018 with mining equipment. And Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract maker of semiconductor solutions, has already included mining in its business plan.

Of course, all these companies know how unreliable the cryptocurrency exchange rate is.

Of course, the incentive to work with cryptocurrency depends on its price, which is extremely volatile. However, demand in 2017 and early 2018 remained consistently strong, and we have every reason to believe that it will not fall in the coming months, TSMC Chairman Morris Chang said in January 2018[42]

En + Oleg Deripaska wants to sell electricity miners for 1 billion rubles

The En + group of companies (owned by Oleg Deripaska) in 2018 plans to sell electricity to cryptocurrency miners for a total of 1 billion rubles, the Vedomosti newspaper writes, citing the company's CEO Maxim Sokov^[43].

The interlocutor of the publication said that En + is negotiating with a number of funds engaged in attracting investments in the construction of farms for mining cryptocurrencies.

The CEO noted that investment funds are looking for potential investors, including from countries such as the United States and China.

"This step will allow En + to diversify its client portfolio," Sokov said and explained that the company will offer miners to build crypto farms near power plants in Irkutsk, Bratsk or Ust-Ilimsk

.

In total, En + can offer miners five sites. These are HPPs (capacity 662 MW) and CHPPs (capacity 665 MW) in Irkutsk, HPPs in Bratsk (capacity 4,500 MW), Ust-Ilim HPPs (capacity 3,840 MW) and CHPPs (capacity 525 MW).

In November 2017, En + held an IPO on the London Stock Exchange. $1 billion was raised, another $500 million was received by other structures of billionaire Deripaska.

The first purchase of a power plant for mining in Russia

In January 2018, a power plant for mining cryptocurrencies was first bought in Russia. We are talking about assets included in Gubakhinskaya Energy Company LLC (GEC), which, according to official data, was acquired by Nadezhda Simanova from T Plus Viktor Vekselberg. The real buyer, according to Kommersant, is Alexei Kolesnik, who headed the GEC at the end of December 2017.

Kolesnik confirmed to the publication that he is considering the option of creating a mining farm, most likely at a site in Udmurtia, but does not plan to do this "closely" before the adoption of the law on cryptocurrencies in Russia. The main project of the businessman is the organization of a data center for the implementation of the "anti-terrorist" laws of Irina Yarova.

The GEC includes Kizelovskaya GRES (Perm Territory, 23.6 MW) and Sarapulskaya CHPP (Udmurtia, 10 MW). T Plus sold the stations separately: GRES for 30 million rubles, and CHPP and city networks - for 129.3 million rubles, the newspaper notes. T Plus refused to name the buyer of the assets to the publication.

The efficiency of these two power plants is very low, experts interviewed by Kommersant indicate. But the requirements of the law and low prices for electricity create prospects for the development of data centers in Russia, they say.

According to   Natalia Porokhova, head of the ACRA research and forecasting group, electricity costs for a data center or mining at these stations will be 40% lower than prices for consumers in these regions, but comparable to prices for consumers in Siberia. The prospects for the development of data centers in Russia are associated with an increase in data storage requirements within the country and relatively low compared to world electricity prices (as a key cost category), she said.^[44]

By the beginning of 2018, the Russian Ministry of Finance is just beginning to develop measures to regulate the cryptocurrency market and in February intends to submit a corresponding bill to the State Duma.

The Ministry of Telecom and Mass Communications proposed to calculate miners on electricity bills to pay taxes

Ministry of Digital Development has developed proposals to control cryptocurrency mining. According to the draft document, which Vedomosti got acquainted with in January 2018, the Ministry of Communications proposes to create a special system for detecting miners - according to the structure of current consumption and Internet traffic. The agency will also correlate data on the capacity of mining equipment and the amount of cryptocurrency that the miner declares on the exchange.

The draft document provides for the introduction of special tariffs and quotas for electricity, and miners will also be taxed. The authors propose to provide miners with a two-year tax vacation, during which they will maintain accounting. After the holidays, legal entities will have to pay income tax, but VAT will not. What tax is in question for individuals is not indicated in the document.

Most members of the working group supported the idea of ​ ​ tax holidays, said one of the participants in the discussion of the project in the Ministry of Communications. It was also proposed to extend them to five years, and to establish the criteria for industrial mining and tax only it for electricity consumption and computing power.

2017

Russia accounts for only 2% of the world's cryptocurrency mining capacity

According to the data, Bitfury Group Russia only 2% of the world's electronic currency production capacity is accounted for. Leading China with 60%, USA Canada and in the aggregate second place with 16%, then comes with 6%, Georgia 5% falls on countries Europe^[45]

Power plants of Deripaska and Gazprom interested miners

Miners became interested in excess power plants. EuroSibEnergo"," which provides sites with energy infrastructure, receives the most offers from miners. There is similar experience OGK-2^[46]

According to a representative of Eurosibenergo, the company has bole​e 70 sites with "the ability to quickly connect to electric networks and substations and inexpensive electricity" in Siberia, the Urals and the European part of Russia, remaining after the closure of production facilities.

The company even launched a site review site to attract investors, and received the most requests from miners. According to the representative, the applications are different - from 100 kW to 30 MW. But so far, cooperation is only under discussion.

On the interactive map^[47] on the company's website there are three power plants in the European part of Russia on which you can rent capacity. These are the Avtozavodskaya CHPP (580 MW capacity reserve) in Nizhny Novgorod, the Novokondrovskaya CHPP in the Kaluga Region (7 MW) and the Ondskaya HPP (reserve is not specified). More than 40 sites are located in Siberia. For example, there is an industrial site for the study. No. 1 TETs-9 (TETs-1) in Angarsk, with a free area of ​ ​ 141.5 hectares and a reserve of up to 166 MW.

Such services are also offered by Wholesale Generating Company - 2 (OGK-2, part of Gazprom Energoholding), Vedomosti reported in the summer of 2017, citing a source in one of the energy companies. According to him, enterprises in the field of metallurgy, agriculture and the IT industry are interested in the capacities of the OGK-2.

Mining server factory launched in Moscow

Moscow In April 2017, a plant for the production of server equipment for mining and maintaining blockchain technology was launched on the territory. See more. Russian Mining Company (RMC)

2016: Boris Titov: Russia can become the world leader in mining

This was stated by the Commissioner for the Protection of the Rights of Entrepreneurs under the President of the Russian Federation, the leader of the Growth Party, Boris Titov during a conversation with journalists in July 2016. B. Titov, in particular, noted that the introduction of blockchain technology is critical for the development of the Russian economy, since this is the technology of the future. In his opinion, it is necessary to create comfortable working conditions in the legal field in our country as quickly as possible.

Due to its climatic conditions and cheap electricity, Russia is an attractive territory for placing mining centers. The creation of a legal framework will provide guarantees and attract additional investments to the Russian economy. Thus, in his opinion, Russia in the future can become the world leader in mining.

Boris Titov said that the Growth Party came up with a proposal to legalize mining. In addition, it is proposed to officially recognize cryptovolutes as an object of property rights, as well as to ensure the recognition of time stamps of the blockchain network as evidence by Russian courts.

Also, the Growth Party proposes to amend the Law on Foreign Investment, which will allow the use of cryptocurrency on a par with fiat currencies for investment in the Russian economy.

Notes