​Russian Federation proposes a complete ban on mining in residential buildings

What’s new? The Energy Commission of the State Council of the Russian Federation came out for a complete ban on mining cryptocurrencies in residential buildings to prevent fires, Izvestia reports. This is due to the fact that mining is not regulated in any way and can lead to the blackout of facilities due to the overloading of power grids. It is also proposed to prohibit mining in energy-deficient regions, such as Kuban, Adygea, Moscow, and Moscow region, and to empower the subjects of Russia with the powers of additional taxation. According to Anton Tkachev, a member of the Duma Committee on Information Policy, Information Technology and Communications, the proposed restrictions may be sent to the State Duma as part of separate draft laws.

Izvestia’s material

What else is known about the initiative? Tkachev noted that mining equipment in the volumes of full-fledged data centers consumes a critical amount of electricity, which leads to excessive loads on power facilities and networks, and as a consequence, disconnection of houses and even districts from electricity. According to him, “the decision to ban mining in residential areas and energy-deficient regions is quite logical.”

The Ministry of Energy confirmed the possibility of disconnection due to power grid overload in residential buildings, saying that the department consistently advocates legislative regulation of mining.

En+ Group, an aluminum and power producer, also confirmed the critical situation with mining in some Russian regions. According to their data, it is especially noticeable in the southeastern part of the united energy system of Siberia, where the lowest tariff is. Earlier, the Ministry of Energy allowed the possibility of building power plants within this system, referring to the growth of resource consumption by industrial miners.

En+ Group added that the Ministry of Emergency Situations regularly draws attention to fires caused by miners and urges residents to notify power grid companies if they suspect that crypto farms are connected to the public grid.

Oleg Ogienko, top executive of BitRiver mining company, believes that a ban on mining in power-deficient regions is inexpedient because the necessary restrictions are already in place. For example, regulators give permission for the construction of large industrial facilities and connections to the power system only if their creation is economically and technically efficient.

According to Ogienko, vesting regions with the authority to impose additional increased taxation of mining will also hit industrial data centers, which already pay taxes in Russia and pay electricity rates for businesses, without having a negative impact on the power system.

Earlier, the Ministry of Finance supported the tax rate for miners in the amount of 7-20%. The State Duma is discussing different taxation options — from the UTII to the income tax.

In July 2022, Yarenergo announced a tender for heat maps to identify mining farms. In December, the Russian Federation began mass identification of illegal miners in residential buildings based on the volume of energy consumption.

Consideration of a bill on the legalization of mining, which had already been delayed until 2023, may again be postponed due to disagreements between the Central Bank, Ministry of Finance, and law enforcement agencies.

For how the mining industry works in Russia, as well as attempts to regulate cryptocurrencies in the country, read GetBlock Magazine’s special materials.