As a researcher with a keen interest in the intersection of technology and policy, I find myself intrigued by the dynamic landscape unfolding in Russia regarding cryptocurrency mining and adoption. Having closely followed the global crypto market for years, it is fascinating to observe how this sector has evolved in such diverse regions as the United States and now Russia.
To address electricity shortages, Russian authorities have revealed intentions to halt cryptocurrency mining in multiple regions during winter. This ban will affect the Irkutsk region, parts of Buryatia, the Zabaikalsky region in Siberia, as well as six areas in the North Caucasus, such as Chechnya and Dagestan.
Mining activities will not be allowed in the Russian-governed areas of Donetsk, Luhansk, Zaporizhzhia, and Kherson in Ukraine.
As a researcher, I am excited to share that the approval for this measure was granted by a government commission, spearheaded by Deputy Prime Minister Alexander Novak. This endorsement signifies a significant step forward in our project’s progression.
This year, Russia has become the world’s second largest country for cryptocurrency mining following the United States. Annually, the country consumes around 16 billion kilowatt-hours of electricity for these activities, accounting for approximately 1.5% of its total energy use. This presents difficulties in regions with harsh climates due to the high energy demands.
Crypto Mining-Focused Reforms in Russia
The recent action follows approximately a month since Russia implemented regulations for cryptocurrency mining, mandating individuals and businesses in the industry to register with the Federal Tax Service. Citizens are allowed to mine up to 6,000 kilowatt-hours monthly without being classified as entrepreneurs, but if they surpass this limit, they must register themselves as self-employed individuals.
As a researcher delving into this topic, I’ve found that the government has set guidelines for managing digital mining-associated records. These regulations ensure that crucial data is electronically disseminated to pertinent state institutions, including the Central Bank and electric utility providers, thereby fostering transparency and coordination in our collective endeavor.
Last week, Russia updated its tax policy on cryptocurrencies. Now, they consider cryptocurrencies as assets for tax purposes. This means that any income earned through mining (the process of creating new digital coins) will be taxed based on the coin’s market value when received, but miners can claim related costs. Additionally, transactions involving cryptocurrency are no longer subject to Value Added Tax (VAT).
Crypto Adoption Soars in Russia
In Russia, while it’s permissible to mine cryptocurrencies, dealing with these digital assets is prohibited. Yet, despite these restrictions, interest in cryptocurrency has surged during the ongoing conflict and escalating sanctions. Previously reported was a notable increase in the development of Decentralized Finance (DeFi) within Russia, primarily due to large institutional transactions.
In Russia, locally developed cryptocurrency services have garnered significant popularity, drawing substantial investments from both domestic and foreign sources. According to Chainalysis, while traffic to centralized exchanges remained consistent, there was a spike in activity on Russian-language exchanges that don’t demand Know Your Customer (KYC) procedures last year. This surge has since stabilized.
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2024-11-21 01:40