Just after the Chinese government banned all cryptocurrencies in September, citing them as illicit monetary conduct, domestic cryptocurrency miners simply disappeared or relocated to other nations to resume their operations.
Following that, the United States surpassed China as the lead in Bitcoin (BTC) mining volumes, with a 35.4 percent stake. Kazakhstan is presently in second place (18.1 percent), with Russia securing the bronze medal (11.23 percent).
It’s hardly unexpected given Russia’s major benefits, which make operating cryptocurrencies in the nation incredibly profitable for practically any miner. There still is a low-cost power and, for the time being, favorable governmental control. As per estimates, the cost of electricity in Russia in spring 2021 will be $0.06 per kilowatt-hour for residential usage and $0.08 for commercial usage.
There in the nation, several independent crypto farms and mining enterprises have formed. In fact, most Russian miners, like the rest of the globe, could not withstand the “crypto winter” of 2018, when Bitcoin’s price plunged to around $3,500, rendering crypto mining unsustainable. COVID-19, on the other hand, has driven many to hunt for extra revenue and different means to replace their money.
Advantageous mining circumstances even influenced government oil corporations to propose crypto mining at their fields including utilizing related gas to create energy. Gazprom Neft, the largest gas provider to European nations, opened a mining data center in Siberia in 2020.
Is cryptocurrency lawful in Russia?
Russia, like other nations, followed the latest developments, and in 2014, there were initial reports of several measures to govern the business. The very first noticeable measures for control were taken in 2018, and in 2019, the national statute “On Digital Rights” took effect, defining the method and standards for utilizing digital assets and tokens. Comprehensive legislation “On Digital Financial Assets” was also proposed. Eventually, a still “crude” and incomplete piece of legislation went into force in January 2021. It was the inaugural law to officially govern cryptocurrencies and mining, as well as to add taxation, although it still did not acknowledge cryptocurrencies as a payment method. Russian banks and stock exchanges can perform asset buy, sale, and exchange operations if they have been listed in the central bank’s unique registry.
Nonetheless, the government lacks a tool for tracking cryptocurrency revenues. Once applied to regular consumers, an individual who wishes to hold Bitcoin and not tell anybody about it may do so securely due to the network’s privacy. Deanonymization happens when cryptocurrencies are traded for rubles, dollars, or other fiat currency, allowing the government to interfere and obstruct these trades.
In fact, Russian authorities are unable to reach an agreement, not only on the acceptance of crypto but also on how to name and control them. Lately, the Russian Ministry of Economic Development suggested that mining be classified as an economic activity under the legal code. The idea was endorsed by the Ministry of Finance, the Ministry of Energy, and the State Duma, Russia’s lower chamber.
The Central Bank said in 2020 that it was investigating the feasibility of a digital ruble. The proposed money could be utilized both online or offline, and it would be kept in a separate wallet. The authority highlighted that its digital money will be a type of the country’s monetary unit. The digital ruble would be part of a new transaction network initiative that will enhance accessibility and lower the expense of making payments and transfers for individuals and companies. As per the Central Bank, the digital ruble will totally supplant currency in 10–30 years.
According to the Central Bank, digital ruble settlements will be relatively harmless and steady. Data protection of the system must be secured, in specific, through a combination of systems based on the concepts of centralization and decentralization.
Is Russia a menace to cryptocurrency?
Certain Russian experts are concerned that the launch of the digital ruble on the Russian economy may result in a prohibition on cryptocurrencies. The common fascination with cryptocurrencies stems from a variety of benefits provided by the system, such as the ability to make international payments.