The Central Bank explained the desire to completely ban cryptocurrency mining in Russia by concern for the state of the power grid, the environment and the economic development of the country.
The Bank of Russia came up with an explanation why it is necessary to distinguish between useful blockchain technology and harmful mining technology. Mining, according to the regulator, generates a request for the creation of an infrastructure for the circulation of crypto assets, fuels public interest in cryptocurrencies, and creates incentives to bypass regulation:
“We see great risks from the institutionalization of mining, since this activity creates significant threats to the country’s economy and citizens. Therefore, we consider it appropriate to ban mining in Russia.”
The opinion promoted in society “about the competitiveness of mining in Russia”, according to the Central Bank, is somewhat exaggerated and is associated “not with the use of high technologies, but with cheap electricity tariffs.” Russia does not produce, but imports hardware for mining, representatives of the regulator emphasize.
Based on Kazakhstani experience, the Central Bank is trying to prove that due to the growing consumption of electricity by miners, networks can be overloaded and accidents that threaten “energy supply of important infrastructure facilities.” In addition, mining causes environmental problems and hinders the development of “many sectors of the economy.”
Recall that on January 21, 2022, the Central Bank published a report “Cryptocurrencies: trends, risks, measures” and launched a round of public consultations on the prospects for a complete ban on mining and circulation of cryptocurrencies in Russia.
The report was subject to criticism from government agencies: the Ministry of Finance, the Ministry of Digital Development and the Ministry of Economic Development. Russian President Vladimir Putin urged the central bank and pro-regulatory government officials to come to an agreement, noting that “Russia has a competitive advantage in mining.”
Until March 1, 2022, the Central Bank is waiting for proposals from participants in the Russian cryptocurrency market and interested departments, after which an agreed decision on the fate of the crypto industry should be prepared.