A massive surge in registered crypto mining firms has transformed Russia’s crypto landscape. What was once a largely underground industry is now rapidly becoming legitimate.
A Tenfold Increase in Registered Miners
At the start of 2024, only 91 crypto mining companies were officially registered in Russia. Fast forward to today, and that number has exploded to over 1,000! This dramatic increase is directly linked to a new law passed in the fall of 2024. This law requires any operation consuming more than 6,000 kWh of electricity per month to register with the Federal Tax Service (FTS). Legitimate miners now significantly outnumber their unregistered counterparts.
This registration process forces companies to disclose their mining output and cryptocurrency holdings, allowing the FTS to collect taxes on mining profits. Industry experts predict this could bring in as much as $500 million annually for the Russian government. This positive outcome is largely due to lobbying efforts from mining leaders who pushed for clear regulations instead of an outright ban.
From Secret Rigs to Stable Grids
Before the mandatory registration, many miners operated secretly to avoid fines and shutdowns. This secrecy often led to unexpected power outages in some areas as large-scale mining operations overwhelmed local power grids. However, according to Alexey Nechaev, head of the New People Party, these issues are rapidly disappearing.
Beyond Bitcoin: Investing in AI
Russian crypto miners aren’t just focused on Bitcoin. Nechaev reports that over $60 million has been invested in artificial intelligence projects this year. This demonstrates a broader strategic shift within the industry, viewing cryptocurrency as part of a larger technological ecosystem. This increased investment is keeping more tech money within Russia, instead of it flowing out to other countries.
Russia’s Growing Crypto Power
Russia now boasts over 150 EH/s of Bitcoin hashrate, representing almost 17% of the global total. This makes Russia the second-largest Bitcoin miner globally, trailing only the US. Estimates suggest Russia mined up to 40,000 BTC in 2024, worth roughly $4.8 billion at current prices. This highlights the rapid growth enabled by a clear legal framework.
Cracking Down on Illegal Mining
While promoting legal mining, the Russian government is also taking steps to combat illegal operations. A top policymaker is pushing for courts to recognize cryptocurrency as “intangible property,” allowing for the seizure of assets from unregistered miners. This move would significantly strengthen the government’s ability to target those still operating outside the law.
Regulation Over Prohibition: Russia’s Crypto Strategy
Ultimately, Russia’s approach to crypto mining seems to be working. By regulating the industry, the government aims to maintain grid stability, boost tax revenue, and foster growth within its tech sector. The focus is clearly on regulation, not prohibition.