Russian Ministry Of Industry And Central Bank Consider Crypto Mining Projects By Russia's Oil Industry

The oil mining industry in Russia is interested in using wasted gas as a source of energy for Bitcoin mining. (photo: unsplash)

JAKARTA - Government institutions in Moscow are now discussing an initiative launched by Russian oil companies to start mining cryptocurrencies at their extraction sites. The industry proposes to utilize associated petroleum gas (APG) to generate electricity that can be used in energy-intensive digital coin minting processes.

Experts say the project has the potential to attract foreign investors, especially from China where authorities have cracked down on bitcoin mining this year. Industrial activities are effectively prohibited in China while in the Russian Federation mining is not prohibited even though it is not properly regulated.

Russia's Ministry of Industry and Trade recently asked the Russian Ministry of Digital Development and Central Bank (CBR) to respond to the idea, Kommersant reported citing a letter sent by Deputy Minister of Industry Vasiliy Shpak. Their department asked the monetary authorities, in particular, whether this would be a legitimate undertaking.

The main act regulating cryptocurrencies in Russia is the law “On Digital Financial Assets” which came into force earlier this year. However, additional legislation is needed regarding its circulation in Russia and related operations.

The legalization of crypto mining as industrial activity has gained support among governments when the Chairman of the Financial Markets Committee of the Russian Parliament, Anatoly Aksakov, stated in September that it should be registered and taxed accordingly.

Kommersant also cites a source close to the Ministry of Industry who revealed that one of Russia's major oil companies already has a crypto mining project underway and wants to scale it up.

"But this segment is in the gray zone legally and companies are worried about a negative reaction from the central bank, so it's turning to the [Industry] Ministry who can discuss the risks with regulators," a source told Kommersant.

According to the official information available, so far only state-run Gazprom Neft, a subsidiary of Russian energy giant Gazprom and the country's third-largest oil producer, have mining projects. The company launched it at its oil field in the Khanty-Mansi Autonomous Okrug, a region in Tyumen Oblast. According to a report from January, the oil giant managed to print 1.8 BTC in a month. Gazprom Neft declined to comment on the matter.