Russia’s Bitcoin Mining Ambitions Raise Economic and Energy Concerns for Parliament

• Russia’s energy tariffs for Bitcoin mining could carry unforeseen economic risks.
• Bitcoin mining in Russia yielded 54,000 tokens in 2023, according to its domestic mining association.
• Cryptocurrencies are now recognized as property in Russia.

Russia’s Bitcoin (BTC) mining ambitions may have unforeseen economic and social consequences if it goes ahead with its current plans to create preferential electricity tariffs for mining entities.

A letter from Boris Gladki, a member of Russia’s State Duma Committee on Energy, has raised concerns over the government’s proposed electricity tariffs for Bitcoin miners .

Bitcoin Mining Concerns

Writing to Deputy Prime Minister, Tatyana Golikova, Gladki has highlighted that using state subsidies for electricity “entails not only economic losses, but also negative social consequences.”

As such, Gladki has proposed that such benefits be abolished. The translated document says:

“ It is proposed to make appropriate changes to the current legislation regarding the abolition of benefits for persons from among preferential categories who are entitled to apply a preferential electricity tariff or receive a subsidy for payment of housing and communal services engaged in mining,”

Under the current mining plan, there are three tiers of electricity tariff, which would be applied to different regions accordingly. It all depends on the amount of mining activity and the quality of their natural gas infrastructure.

The first tier of tariffs is within 3.9 thousand kWh; the second is limited to 6,000 kwH – which doesn’t work well for areas with low gasification levels.

A third tier is available for individual miners at 6,000 kwH, a limit that can be “covered”, in full, by a preferential tariff.

The Crypto Push

With increasing sanctions and economic woes, Russia is in a tight spot , and its latest crypto mining push appears to be one of many efforts to cushion the blows.

Sweeping regulations to tax and regulate crypto and crypto mining are now coming into effect, which will legitimize the sector in Russia to some degree. But it’s unlikely it will yield noticeable upsides in the short term.

However, if Russia’s ultimate aim is to occupy a dominant chunk of the Bitcoin network, which some consider a geopolitical threat , then Russia may win big in the long term.