Russia is preparing its most aggressive assault yet on unauthorized cryptocurrency mining, with new legislation granting courts unprecedented power to confiscate digital assets from illegal operators.
The Ministry of Digital Development’s proposed rules would transform crypto violations from administrative fines into potential criminal offenses, marking a dramatic escalation in the government’s battle against the shadow mining economy that has flourished in energy-rich regions like Siberia.
Harsh Penalties Sought
The draft crypto legislation, currently under interdepartmental review, establishes a punitive framework designed to eliminate unauthorized mining operations across Russia.
Individual miners operating without proper registration face fines between 100,000 and 200,000 rubles ($1,270-$2,540), while solo operators and officials could see penalties double to 400,000 rubles ($5,090). Corporate violators face the steepest consequences, with fines reaching up to 2 million rubles ($25,455).
The most significant weapon in Russia’s new arsenal is judicial authority to seize cryptocurrency assets directly from unauthorized miners. This power extends to both small-scale home miners participating in illegal pools and large industrial operations that have been exploiting the country’s abundant cheap energy.
The crackdown specifically targets the epidemic of illegal crypto mining that has plagued Siberia’s energy infrastructure. The region’s combination of cold temperatures and low electricity costs has created a perfect storm for unauthorized operations, with miners using makeshift connections to power grids and causing significant financial losses.
Current law permits unregistered individuals to mine cryptocurrency at home while consuming less than 6,000 kilowatt-hours monthly. However, approximately ten regions already impose tighter restrictions, and the new legislation would add comprehensive reporting requirements for mining infrastructure operators. Data centers and hosting providers must disclose activities, mined assets, and wallet identifiers to Rosfinmonitoring, Russia’s anti-money laundering watchdog.
Crypto Criminal Escalation
The ministry’s most ambitious goal involves elevating serious mining violations from administrative infractions to criminal offenses, meaning violators could face criminal records rather than simple fines.
The legislation also expands beyond mining operations to target cryptocurrency payments made outside the Central Bank’s approved sandbox. Violators using digital coins for regular transactions could face fines up to 1 million rubles ($12,730), while individuals with past convictions for economic crimes or terrorism would be completely barred from mining activities.
Russia’s aggressive stance reflects broader geopolitical concerns about cryptocurrency’s role in sanctions circumvention and illicit activities. The country’s “shadow territories,” including Transnistria and Donbas, have become hubs for large-scale Bitcoin mining operations that exploit free or subsidized energy.
The proposed rules arrive as Russia implements seasonal mining bans in energy-intensive regions like Irkutsk, Buryatia, and the North Caucasus to address winter electricity shortages. Despite these restrictions, a government energy commission recently rejected additional regional mining bans, suggesting authorities prefer targeted enforcement over blanket prohibitions.
The legislation remains under interdepartmental review before advancing to lawmakers for final approval, but its passage would fundamentally reshape Russia’s cryptocurrency landscape and potentially drive mining operations further underground or out of the country entirely.
