Russia is poised to intensify its efforts against unregistered cryptocurrency mining, introducing criminal penalties that could lead to forced labor and prison sentences. This move comes just over a year after the country officially legalized cryptocurrency mining in an effort to regulate what has become a booming industry.
The Ministry of Justice recently published draft amendments to the Criminal Code, aiming to shift many forms of illegal crypto mining from an administrative offense to a criminal one. Despite the legalization intended to bring the sector into compliance, the response has been lackluster, with most miners reportedly continuing to operate outside the established regulatory framework introduced in 2024.
According to Deputy Finance Minister Ivan Chebeskov, only about 30% of miners have registered with the Federal Tax Service, leaving a significant majority in what officials refer to as a “gray zone.” This lack of compliance has prompted the new proposed regulations, which would impose severe fines and labor-related penalties on individuals who engage in unregistered mining activities.
Specific details from the draft law outline a range of penalties. Individuals caught mining cryptocurrency without the necessary registration could face fines between 500,000 to 1.5 million rubles, along with a potential two-year sentence of forced labor. In less severe cases, courts could impose up to 480 hours of compulsory labor. For larger operations generating significant income or involving coordinated groups, penalties would escalate to fines of up to 2.5 million rubles, forced labor for up to five years, or prison sentences of equivalent duration.
Authorities have not only outlined financial penalties but also retained the option for the confiscation of mining equipment, emphasizing their commitment to clamp down on illegal operations. The current regulatory framework distinguishes between small-scale and commercial miners; individuals using less than 6,000 kilowatt-hours of electricity monthly may mine without registration but are still obligated to pay personal income tax on any mined cryptocurrency.
However, the enforcement of these regulations has proven challenging. Illegal mining operations are often associated with electricity theft and are increasingly straining local power grids. Reports from various regions indicate that unregistered mining activities have caused outages, leading authorities to impose temporary bans during peak demand periods. Estimates suggest that these illegal operations consume billions of kilowatt-hours each year, further complicating the energy landscape.
Previous approaches to control illegal mining, which included fines up to 2 million rubles and the seizure of equipment, have not effectively curbed the trend. Law enforcement actions so far have involved arrests of utility workers allegedly aiding illegal operations, alongside the closure of large mining farms.
The recently published draft amendments, open for public consultation, signal a significant shift in approach as the Russian government seeks to take more rigorous measures against unregistered mining entities.
