Russian officials call to legalize crypto mining ‘as soon as possible’. And this contradicts the government’s previous position.
The invasion of Ukraine already had a terrible impact on the Russian economy.
The Russian ruble is about to touch the Mariana Trench bottom soon. And most Western countries don’t want to trade with the aggressor anymore.
The wealthiest Russians are striving to save their money in crypto. But the Russian government has shown hostility to any digital assets idea.
All of a sudden, everything is changing. Russian officials are doing more and more steps to avoid sanctions with crypto. And they even called to legalize mining.
What happens to the world mining community if Russia legalizes mining?
Russia’s turn to crypto
At the end of the March Russian Deputy Minister of Energy Evgeny Grabchak said that the government should ‘eliminate the legal vacuum around crypto mining’.
Grabchak called the country’s officials to introduce clear regulations for crypto mining. And this statement widens recent support for digital assets by Russian management.
If we want somehow to get along with this activity, and we have no other options in the current reality, we must introduce legal regulation, Evgeny Grabchak said.
He also proposed the regional authorities set energy quotas and possible places for crypto mining companies.
Earlier Vice-Premier Aleksandr Novak said mining legalization ‘would be reasonable’.
Still, the future of crypto in Russia is foggy.
Back in January Central Bank of Russia announced an outright ban on mining and trading. And then in March lower chamber of parliament – Duma – called for the “clear regulation of the digital assets industry”.
Now they think it can be ‘the most effective approach to legalize crypto in the country’.
What is with crypto mining in the world?
Big countries can have big impact on mining industry.
Last summer China’s ban on crypto mining shook the industry and made Bitcoin drop in half.
It took quite a while for Bitcoin to resurrect.
Enter the US. Without thinking twice US President Joe Biden issued Executive Order on crypto regulation, which can broadly support crypto miners.
The next day Bitcoin price started moving up.
“We believe the fact that the U.S. government is now more formally recognizing, engaging with, and seemingly supporting the digital asset industry will be a positive for public crypto mining companies,” Jefferies Group analyst Jonathan Peterson said.
Since China banned crypto, the U.S. became the global leader in Bitcoin mining with regard to the hash rate.
Crypto mining remains semi-legal in most countries.
And it’s totally illegal in Algeria, Egypt, Morocco, Bolivia, Ecuador, Nepal, Pakistan, Bangladesh, China, Dominican Republic, North Macedonia, Qatar, Vietnam.
Another huge problem with illegal mining is electricity theft. Recently Malaysian biggest energy company called to legalize mining and proposed special tariffs for miners because of unauthorized electricity connections.
Taking into account that the Russian Deputy Minister of Energy called for mining legalization, they can have the same problem there. Or not. If the Russian state implies different electricity prices for miners, at least in some regions, the big picture might be scary for miners from the rest of the world.
Due to easy access to energy resources like oil, some regions of Russia have kind of the lowest electricity prices in the world. That means, investments in Bitcoin mining there might be actually limited to mining hardware.
That might give Russian miners the edge over others. Expensive electricity in EU or the US is the factor, limiting the profitability of Bitcoin mining.
And this situation is only worsening with Bitcoin mining complexity growing on par with electricity prices.
Should we worry about Bitcoin future?
Let’s see what happens and will Russia impose competition on the US in terms of mining.
Because that could have great impact on crypto mining industry.
Just imagine how your attitude towards Bitcoin might change, if you realize that its network is heavily relying on mining that’s being done in Russia.
That wouldn’t concern any crypto on a Proof-of-Stake model. So Ethereum with its upcoming Merge is out of discussion. But Bitcoin, still the most influential crypto, might suddenly become very political. That’s not what Satoshi wanted, right?