Russia may soon enact a law that would make cryptocurrency mining legal. The profession of miner would thus be recognized.
This was revealed by the Izvestia newspaper, which cited government sources.
Russia, cryptocurrency mining becomes a profession
The Ministry of Economic Development and the Ministry of Energy are reportedly keen to make mining a real profession. The Duma is reportedly in favour of the proposal, while the Central Bank is not.
The reasons are simple: miners would pay taxes on their earnings, which is not the case at present. They would basically be real entrepreneurs.
However, the Russian laws currently in force never mention the concept of mining when it comes to cryptocurrencies. And although it takes more than a home computer to mine Bitcoin, the new law, should it be authorized and approved, would allow miners to specify that their energy consumption is for entrepreneurial (and not domestic) activity. However, it seems difficult to identify small miners.
On the subject of energy, Izvestia reports that in the Duma there are already those who want to increase the cost of electricity for miners.
The Russian Central Bank, for its part, would not be in favour of the initiative. It would mean supporting the mining of an alternative currency, to the detriment of the rouble.
Russia’s role in Bitcoin mining
Figures reported by the Russian newspaper indicate that the income from Bitcoin mining is $19.7 billion worldwide. Of this figure, 12% or $2.4 billion are in Russia. That is why for the supporters of the proposal, it is necessary to legalize the activity and charge taxes on it.
These income percentages are very close to the hashrate percentages held by Russia as of August 2021 of 11.23%.
Only the United States (35%) and Kazakhstan (18%) have a higher hashrate share.
These figures show that Russia has a community of miners that the government plans to exploit to its advantage.
Doubts about the future of crypto in Russia
The future of cryptocurrencies in Russia remains somewhat doubtful. Legalizing mining activities may not be a good solution. As with China’s ban, there is nothing to rule out that miners will move to more favourable locations where taxation is not a ballast.
While there is speculation about a future in which cryptocurrency mining will take place by recovering gas waste used for oil extraction, the regulatory framework remains to be defined.
In the Duma, the Russian parliament, a bill is reportedly in the works to restrict trading to experienced traders only, to protect inexperienced traders from risky investments. But this would result in a restriction that would not be easy to enforce. Exchanges are also viewed with suspicion as it is feared that they could become unwitting “accomplices” in illegal cryptocurrency activities.
What is certain is that Russia will not ban Bitcoin, since, as mentioned by President Vladimir Putin, they have a right to exist. It remains to be seen if this opinion is related to the nature of cryptocurrencies themselves or whether it is a way to undermine the world’s strongest currency, the US dollar.