• Sun. Jun 23rd, 2024

Russia Allocates More Energy For Domestic Crypto Mining Operations

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Dec 12, 2022

Miners’ Electricity Consumption Likely to Double In 2023

Mining operations in Russia are collectively consuming approximately 1.5 to 2% of the total electricity consumed in the country.

However, the Russian Government is of the view that this figure would double in the upcoming year. This is rightly so because mining operations have been legalized in Russia and mining activities are governed under specific laws.

What is illegal however is the circulation of minted cryptocurrencies at the local level.

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Pavel Snikkars, Deputy Minister of Energy, noticed that in 2021 miners were consuming 1% of the total electricity consumption. He also noticed that 2021’s figure for electricity consumption almost doubled in 2022.

He is now expected that the electricity consumption by miners in 2023 would accordingly further increase to either 3% or 4%.

Russia Plans to Give More Energy to Miners

The Deputy Minister stressed that Russia is an electricity-rich country and has huge reserves of unused electricity.

He stated further that interested parties would be facilitated in specific areas where electricity production capacity is excessive but consumption is low.

Snikkars said that Russia would be glad to offer its excess electricity to the mining industry even at much cheaper rates.

He explained that Russia has always been at the forefront of developing new power plants and making them operate efficiently.

Deputy Minister suggested that the Government has commenced work on installing a nuclear power station whose construction will be completed in 10 years.

He said that project has been initiated specifically at the specific requests of miners carrying out operations in that area.

With Russia growing friendly towards crypto mining projects, more and more mining firms are finding it suitable to move to Russia.

The Russian weather is very friendly towards the mining centers that require a lot of cooling for mining operations.

Miners’ Warning

Energy Minister also took note of the situations created by miners in certain areas.

He pointed out that it is in the knowledge of the energy regulator that certain miners are deriving undue benefits. He warned miners from carrying out activities in areas where the load is not such that can endure mining operations.

It may be noted that apart from mining firms, crypto mining is also going on actively at the individual level.

Snikkars urged the energy regulator to immediately take notice of the situation and initiate all steps necessary to prevent such activities.

Crypto and Crypto Mining Regulations

The Second-in-command of the Russian Energy Ministry also shared his views on crypto regulation.

He claimed that the crypto-aimed bill presented in State Duma in November had the full backing of the Russian Government.

He suggested that the bill would hopefully be passed by the lawmakers prior to 1st January 2023.

The said bill was originally moved by Senator Anatoly Aksakov, who is the head of State Duma’s Committee on Financial Markets.

The bill aimed at supporting and encouraging mining operations in the country while debarring the use of the mined currencies locally. This is because Russia is bracing for a major traditional economic downtrend.

The global economy is expected to face a major collapse in 2023 and Russia does not want to be on the wrong side. Therefore, the country is doing whatever is necessary to increase its exposure in the crypto sector.

West Sanctions

Russia had been a victim of several sanctions by the West because of which financial implications have worsened after Russia invaded Ukraine.

Consequently, Russian exports have been restricted to an extent so as to cause a further financial crisis.

For growing revenue resources, Russia has been targeting alternate revenue generation resources and one of them being crypto.

Since Russia is known for being power enriched, it wants to utilize excessive energy for revenue generation by encouraging mining.

There is also a proposal under consideration by the Russian Government that crypto payments be used for international payments.

Even the Russian premier, Vladimir Putin, has several times suggested the use of crypto for foreign payments.

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