Cryptocurrency miners in Russia may have a new ally: President Vladimir Putin.
Bloomberg today reported that Putin wants to “tax and regulate” cryptocurrency mining rather than banning the practice. “We also have certain competitive advantages here, especially in the so-called mining,” Putin reportedly said. “I mean the surplus of electricity and well-trained personnel available in the country.”
Putin’s stance appears to be more nuanced than that assumed by Russia’s central bank, which called for all cryptocurrencies to be outlawed, even as the Ministry of Finance argued in favor of regulating this digital money instead. Bloomberg said Putin has ordered the central bank and the ministry to reach an agreement.
Regulating the crypto market and cryptocurrency mining has been a hot button issue around the world for the last year. China banned mining from most of its provinces in early 2021, which prompted many of the country’s mining operations to move to other countries (or try to evade detection while they continue to mine).
China’s displaced mining operations mostly sent their rigs to the U.S., Canada, Kazakhstan and Russia. This migration pushed Russia’s share of the Bitcoin mining industry from 7% in November 2020 to 11% in October 2021, according to the Cambridge Centre for Alternative Finance, which puts the country in third place.
Swedish regulators have called for cryptocurrency mining to be banned from their country, too, and India has considered similar restrictions. But it hasn’t all been doom and gloom: El Salvador has devoted itself to Bitcoin by using volcanic energy to mine the cryptocurrency, making it legal tender, and planning a full Bitcoin City.
Putin seems to be somewhere between China and El Salvador. Bloomberg reported that he wants to confine mining to regions with a surplus of electricity, so the rules wouldn’t be as permissive as they are now, but he also doesn’t back a ban on the practice. Now it’s up to the central bank and the Ministry of Finance to walk that line.
BitCluster co-founder Vitaliy Borschenko reportedly told Bloomberg that Russia’s government invited cryptocurrency miners to join a working group after the central bank published its report and that “most ministries and agencies are against radical measures.”
This is largely similar to the U.S. government’s approach to cryptocurrency regulation. The country doesn’t seem poised to limit mining, despite concerns about its environmental impact, but it has been more strict about taxing the crypto industry. (And has considered even more stringent regulations in the past.)