Bitcoin Mining Looks Ready to Fall Under Russian Regulations

A few months ago, the talk was that Russia was actually looking to subsidize mining costs. However, that seems to have been a ploy to perhaps gain control over miners and get them to register with the government for more than just protection from money laundering.

Bitcoin mining in Russia has long operated in a ‘legal grey area’, thanks to lack of regulation, as well as reasonable electricity, which has made home-mining operations possible and profitable.

However, with Russia’s recent crackdown on cryptocurrencies, through the banning of access to exchanges, the iron-fisted government is also taking aim at miners.

Putin’s crackdown

Russian President Vladimir Putin called for regulation of cryptocurrencies at a meeting with top financial officials Tuesday, warning about the “serious risks” they bear. The Finance Ministry proposed to allow mining only for businesses and private entrepreneurs that would register with the government, to reduce the risk of money laundering.

Contrarily, a report indicated that the government, through the Institute for Internet Development (IRI) and the Russian Association of Blockchain and Cryptocurrency (RABIK), had laid out plans to make electricity costs lower for Russian Bitcoin miners.

However, that seems to have been a ploy to perhaps gain control over miners and get them to register with the government for more than just protection from money laundering.

Make it a legal endeavour

Of course, despite hard-nosed crackdowns from Russia and China recently, there are many who believe regulation is the way forward for cryptocurrencies, and in Russia there is a movement for turning mining into a legal endeavour.

Arseniy Scheltsin, the director of the Russian Association of Cryptocurrencies and Blockchain (Racib), a Kremlin-backed lobby group said: “This way of making money suits the national mentality well. Russian fairy tale heroes tend to laze around while their job does itself magically.”

Scheltson is leading a push for further subsidies and lower electricity tariffs for crypto miners, which he believes will lead to miners being more transparent and in line with the law, including tax laws.

“This would allow a global competence center to develop and increase Russia’s influence over the functioning of leading virtual currencies,” he said.

Putin’s aide, Vitalik Buterin

Russia’s push to understand cryptocurrencies further came when the President met with Ethereum’s 23-year-old creator Vitalik Buterin, calling for deployment of a digital economy in Russia to diversify the nation away from a reliance on oil and gas.

Russia’s move towards a digital economy seems to becoming a reality as state interest has hit a new level, and the control of such assets has come along with it. Regulating the access to exchanges, and now controlling the mining, would see Russia taking the lead in terms of governments trying to control the decentralized crypto world.

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