Due To Energy Crisis, Russia Restricts Crypto Mining

Due to the energy crisis, Russia limits crypto mining (Photo; Doc. IBTimes)

JAKARTA - Crypto mining in Russia faces a massive threat of restrictions after the country's Ministry of Energy proposed a periodic ban in some areas with limited electricity supply. The move, designed to address energy deficits during winter, shows how Russia's energy sector and fiscal policy are prioritized over the crypto industry. The policy is scheduled to take effect from December 1, 2024 to March 15, 2025, and is valid every year until at least 2031.

According to TASS, Russia's official news agency, the proposal was made in response to estimates of energy deficits in several regions, including Irkutsk, Buryatia, Trans-Baikal, and the North Kaupadaan region such as Dagestan, Chechen, and Ossetia. Regions receiving electricity price subsidies will be the main focus of this ban. The move is considered important to maintain energy stability during winter, when electricity consumption usually soars sharply.

Reporting from News Bitcoin, anonymous officials in the report stated that the proposal will be discussed at a government commission meeting on November 18, 2024. If approved, the ban will have a direct impact on crypto mining operators in the region, which will be forced to stop their operations during the peak energy demand season.

This restriction measure is not without reason. The Siberian region, for example, has become the center of crypto mining activity thanks to its natural cold temperatures and relatively low electricity prices. However, the surge in energy consumption due to this activity has burdened local power grids, sparking complaints from local communities and energy authorities.

In October 2024, Russia's Deputy Minister of Energy, Yevgeny Grabchak, confirmed that the government cannot guarantee a large energy capacity for the sector until 2030. His statement reflects the great challenges facing the country in balancing the energy needs of the crypto industry with other domestic needs.

Although this restriction aims to protect energy infrastructure, its impact on the global crypto market cannot be ignored. Russia is one of the main players in the global crypto mining ecosystem, especially for assets such as Bitcoin (BTC). This ban has the potential to reduce the global hash rate, which can affect transaction times and costs on blockchain networks.

In addition, crypto miners in the affected areas may have to look for alternative locations with more friendly regulations or more stable electrical infrastructure. This could trigger a wave of miners' migration to countries like Kazakhstan or even to other regions in Central Asia.