Russia is moving forward with a landmark cryptocurrency tax bill that introduces a structured taxation framework for Bitcoin miners and digital currency operations. Following approvals in the State Duma and the Federation Council, the bill now awaits President Vladimir Putin’s signature to become law.
The legislation marks a significant shift in Russia’s approach to digital currencies. For the first time, cryptocurrencies are officially classified as property under the Russian Tax Code. This resolves long-standing ambiguities that have hampered legal proceedings involving crypto-related cases.
Digital currency mining and subsequent transactions on exchanges are exempt from value-added tax (VAT), reducing operational costs for miners. Services provided by authorized organizations under experimental legal frameworks also benefit from tax exemptions.
Tax Rates for Miners and the Legislative Process
The bill outlines a tiered tax structure for crypto mining revenues:
13% tax for annual earnings up to 2.4 million rubles (approximately $21,210).
15% tax for earnings exceeding this threshold.
Businesses engaged in mining activities will be subject to standard corporate income tax rates, while personal income tax on mining earnings will align with asset valuations on international exchanges. From 2025, individuals earning over 2.4 million rubles annually will face the higher 15% tax rate.
Mining infrastructure operators are required to report data on system users to tax authorities. Miners must also disclose their activities to the Federal Tax Service (FTS), with penalties of up to 40,000 rubles ($354) for non-compliance.
The crypto tax bill is part of a rapid regulatory overhaul initiated earlier this year. President Putin signed Russia’s first crypto mining legalization law in August, which became effective on November 1. This was followed by temporary mining bans in energy-strapped regions during the winter.
As of now, approximately 150 companies have applied for operating permits, and more are expected to follow, according to the FTS.
Rising Demand and Persistent Challenges in Crypto Mining in Russia
The rapid legislative developments in Russia’s crypto sector have triggered a surge in demand for mining hardware. According to Lenta, weekly purchases of mining rigs have risen sharply from about 30 earlier this year to 600 in November. This heightened interest has led to a 10%–15% increase in equipment prices, as reported by Moscow-based firm Mining Group.
A Russian Bitcoin miner unveils his personal mining system at home. Source: PC Boyarin/YouTube
Alexander Peresichan, CEO of software solutions provider Tehnobit, noted that despite rising costs post-Bitcoin halving in spring 2024—where mining costs reached around $40,000 per Bitcoin in most regions and $35,000 in Irkutsk—profitability remains high. However, Irkutsk, a hub for Bitcoin mining due to its affordable energy, faces significant challenges from illegal mining operations, which are straining the region’s power grid.
Beyond equipment demands, the crypto mining sector grapples with regulatory and energy-related hurdles. The government has ramped up scrutiny in energy-constrained areas, including Siberia and Irkutsk. Seasonal mining bans are under consideration to prevent winter power shortages, with restrictions potentially extending until 2031.
Meanwhile, unregulated mining activities have overwhelmed Russia’s aging power infrastructure, causing blackouts in regions like Dagestan. Crypto mining is estimated to account for 1.5% of the nation’s electricity consumption, prompting calls for stricter tariffs and federal oversight.
Although the legalization of mining has offered a semblance of stability, the evolving regulatory framework continues to create uncertainty. Additionally, restrictions on foreign individuals engaging in mining activities add another layer of complexity to Russia’s burgeoning crypto mining industry.
