Russia Bans Crypto Mining in Ukraine’s Occupied Territories: Here’s Why

Crypto Mining in Russian-Occupied Ukraine Faces Ban Amid Power Struggles

As the conflict in Ukraine nears its 1,000th day, Russia is stepping up its regulatory approach to crypto mining in territories under its control.

The growing pressure on energy supplies has prompted the government to target this power-hungry industry, which has been taxing local grids in regions already facing shortages.

Energy Crisis Drives Crackdown on Mining in Occupied Regions

A meeting chaired by Russia’s Deputy Prime Minister, Alexander Novak, revealed the extent of the country’s struggle with energy resources, particularly during the peak autumn and winter months.

Crypto mining, a highly energy-intensive activity, has come under scrutiny, especially in areas with limited electrical capacity like Donetsk, Lugansk, Zaporizhia, and Kherson.

These regions, now under Russian control, will be the focus of a proposed ban aimed at reducing the burden on local power grids.

Full Ban Coming to Energy-Stressed Zones

Starting December 2024, mining operations in the North Caucasus and Russian-occupied Ukrainian territories will be fully prohibited.

The move comes as Russia battles to maintain stable energy distribution during the colder months.

Siberia Faces Annual Crypto Mining Suspensions

Siberia will also face periodic mining suspensions from December 1 to March 15, 2025.

This restriction is set to recur annually, running from November 15 through March 15, continuing until 2031.

These measures are part of a wider strategy to manage the strain on the Russian power supply during harsh winter months.

Crypto Mining Regulation Under Review

Alongside the mining ban, Russia has been revising its broader crypto regulation framework.

New legislation gives the government more power to regulate mining pools directly, while crypto’s use as a payment method continues to enjoy government backing.

Recent changes to the taxation system aim to provide a clearer structure for miners.

Cryptocurrencies are now treated as property for tax purposes, with income from mining taxed based on its market value when received.

Notably, crypto-related earnings will be subject to a personal income tax cap of 15%, and transactions will be exempt from VAT, creating a more miner-friendly tax environment.

National Crypto Exchanges in the Pipeline

In addition to the regulatory overhaul, Russia is taking steps to establish national cryptocurrency exchanges.

Reports indicate these exchanges will likely be based in St. Petersburg and Moscow, marking a significant shift in the country's approach to digital currencies.

These exchanges are expected to provide a more controlled and transparent platform for crypto transactions within Russia.