Russia tightens cryptocurrency regulation! Unregistered Bitcoin mining activities may face 2 years in prison and hefty fines

Russia shifts to strict criminal regulation after legalizing mining; unregistered Bitcoin miners may face criminal charges and hefty fines. The government aims to use legal risks to compel industry-wide compliance and alleviate energy and tax pressures.

After officially legalizing cryptocurrency mining, Russia is preparing to tighten regulations further, imposing severe criminal penalties on unregistered Bitcoin BTC mining activities. The Ministry of Justice recently announced a draft amendment to the Criminal Code proposing to reclassify multiple illegal cryptocurrency mining behaviors from administrative violations to criminal offenses. Unregistered Bitcoin miners could face forced labor or up to two years of imprisonment and fines ranging from 500,000 to 1.5 million rubles.

Only 30% of Russian Bitcoin miners are registered; the rest operate illegally

This legislative proposal stems from Russia establishing a formal cryptocurrency mining regulatory framework in 2024. At that time, President Putin signed relevant legislation in the summer, legally recognizing mining activities and aiming to bring the long-standing gray-area industry into the regulatory, taxation, and energy management systems. However, official statistics show a significant gap between enforcement and policy intentions.

Deputy Minister of Finance Ivan Chebeskov noted in June that only about 30% of miners are registered with the Federal Tax Service, with most operators still unreported and continuing to operate in the so-called “gray zone.” Authorities believe this widespread non-compliance not only weakens the tax base but also causes long-term stress on the power grid and local infrastructure.

Russian Ministry of Justice issues heavy fines and forced labor penalties

According to the draft amendment published by the Ministry of Justice, individuals engaged in mining without proper registration could face fines of 500,000 to 1.5 million rubles or up to two years of forced labor. In less severe cases, courts may impose up to 480 hours of compulsory work as an alternative punishment.

For large-scale, organized mining operations or miners generating substantial or exceptionally large income, penalties will be further escalated. The draft stipulates that such conduct could be fined up to 2.5 million rubles or sentenced to up to five years of forced labor or imprisonment of the same duration. Additionally, confiscation of mining equipment and other property sanctions will remain among law enforcement measures.

Under current regulations, Russia employs a tiered management system for miners. Individuals with monthly electricity consumption below 6,000 kWh are considered private users and can mine without prior registration, but must declare the mined cryptocurrencies and pay personal income tax. Conversely, commercial mining farms and related infrastructure operators are required to register officially, submit periodic production reports, and comply with regional restrictions set by local authorities based on power load or energy security considerations.

However, law enforcement admits that cracking down on illegal mining remains challenging in practice. Many unregistered farms involve electricity theft or are located in prohibited areas, causing long-term and covert burdens on local power grids. Some regions have even imposed temporary bans on mining during winter peak electricity demand due to illegal activities.

Bitcoin illegal mining consumes large amounts of electricity, impacting public utilities

Official estimates suggest that illegal mining activities consume hundreds of millions of kilowatt-hours annually, significantly affecting energy dispatch and public electricity supply. Russia has previously attempted to curb these activities through fines of up to 2 million rubles, equipment confiscation, and raids, but with limited success. Law enforcement actions have extended to internal power company staff suspected of assisting illegal miners, with several employees arrested and large underground mines shut down.

The recent criminal law amendments proposed by the Ministry of Justice indicate Russia’s intention to increase legal risks to force miners toward compliance. The draft was officially announced on December 30 and is now open for public comment. Whether these stringent laws can effectively change the long-standing gray ecosystem of mining remains to be seen.

• This article is reprinted with permission from: 《Chain News》
• Original title: 《Russia Tightens Cryptocurrency Regulations; Unregistered Bitcoin Mining Faces Criminal Penalties and Heavy Fines》
• Original author: DW