Russian Senate OKs Crypto Mining Bill - What Happens Next?

**The Russian Senate has approved a draft law on crypto mining, meaning the landmark bill will now pass into law pending President Vladimir Putin's signature.

Per Vedomosti, the Federation Council approved the mining law and another bill on experimental foreign trade settlements in cryptocurrency.

The mining law will allow both legal entities (industrial mining firms) and sole proprietors (individual miners) to mine crypto, provided they sign up for a national register. News of the law will be a massive relief to small-scale home-based miners.

Individuals will be allowed to mine tokens provided they stay within the government's energy consumption limits. The bill also gives the government the right to impose mining bans in certain energy-deficient regions.

Politicians expect Putin to sign off on the laws, which are bundled into a package of hundreds of other legal changes, early this week. The media outlet and others noted that the law should enter into force on September 1, 2024.

Years of Uncertainty for Miners

Miners have been pleading with Moscow to legalize their industry for several years. But a political impasse has left them in legal limbo.

However, intensive lobbying earlier this year and power shortages in certain Russian Bitcoin mining hotspots have finally broken the deadlock. Last month, Putin announced the urgent need for legislative regulation of cryptocurrency mining.

The Russian President noted that uncontrolled growth in electricity consumption for crypto mining could lead to power shortages in certain regions. The State Duma responded by fast-tracking the bill through the house, with its second and third readings passed daily (July 30).

Not All Miners Happy?

The bill will provide legal definitions for terms such as mining and mining pools and allow for the creation of a second register of mining infrastructure operators under the jurisdiction of the Ministry of Digital Development.

Roskomnadzor (the Federal Service for Supervision of Communications, Information Technology, and Mass Media) will be responsible for compliance.

The law also bars electrical power companies from directly launching their crypto-mining operations. Miners will be obliged to report all of their earnings to the tax body and provide details of all their crypto wallet addresses.

Russian miners and mining pools must sell coins without using Russian infrastructure. This would force Russian miners to sell their coins on international crypto exchanges.

Sanctions a Concern?

Such a move may well result in US and Western governments responding with sanctions on trading platforms that do business with Russian miners.

However, Russian media outlets claimed that a national exchange infrastructure could be launched in the months ahead. Some miners called the move a breakthrough, while others labeled it a historic event or an important government decision.

Forklog reported that many miners were in two minds about the text of the draft law, noting: On the one hand, the emergence of a regulatory framework will allow [miners] to streamline their processes. But on the other hand, several clauses frighten businesses.

The outlet quoted PR and Communications Director Mike Lvov of the mining specialist firm EMCD Tech as expressing concern about registries and providing full reporting on cryptocurrency mining activities.

He said: What will happen with this data needs to be clarified. How will it be processed, and by whom? How will this information be used? There have yet to be any clear answers to these questions.

Future Energy Price Hikes?

Lawmakers in the Duma and the Russian Senate have claimed that the government and agencies will not interfere with miners except in exceptional cases.

However, others appear unconvinced and fear prohibitive energy price hikes. Fedor Ivanov, the Director of Analytics at the crypto security provider Shard, warned: *First, the [new] regulation needs to [start] working.

The industry must come out of the shadows and sort out taxation-related issues. [...] Only then can we start discussing raising tariffs.*

Ivanov added that simply raising tariffs is an ill-considered idea. The expert concluded that pressure on large industrial miners would reduce Russia's attractiveness in the crypto sphere.

He also said that such measures would not solve the problems of home miners and illegal connections to power grids. Most observers think that Bitcoin accounts for most of the Russian crypto-mining mix, with over 90% of miners focusing their efforts on BTC.