Unregistered Bitcoin Mining In Russia May Soon Come With Up To Two Years Of Forced Labor

Russia is preparing to escalate its crackdown on unregistered cryptocurrency mining, proposing criminal penalties that include forced labor and prison sentences, little more than a year after formally legalizing the industry.

The Ministry of Justice on Monday published draft amendments to the Criminal Code that would reclassify many forms of illegal crypto mining from an administrative offense into a criminal one. 

The proposal comes amid widespread noncompliance with the regulatory framework that took effect in 2024, following President Vladimir Putin’s signing of mining legislation last summer.

Although mining was legalized to bring the fast-growing sector out of the shadows, authorities say most operators continue to avoid registration and taxation. Deputy Finance Minister Ivan Chebeskov said in June that only about 30% of miners had registered with the Federal Tax Service, leaving the majority operating in what officials describe as a “gray zone.”

Harsh penalties for illegal mining in Russia

Under the draft law, individuals who mine cryptocurrency without proper registration could face fines ranging from 500,000 to 1.5 million rubles, or up to two years of forced labor. Courts would also be allowed to impose up to 480 hours of compulsory labor in less severe cases.

Harsher penalties are reserved for large-scale or organized operations. Mining that generates “significant” or “especially large” income, or that involves coordinated groups, could result in fines of up to 2.5 million rubles, forced labor for up to five years, or prison sentences of similar length. 

Equipment confiscation and additional financial penalties would remain possible.

Russia’s current framework distinguishes between small-scale and commercial miners. Individuals consuming less than 6,000 kilowatt-hours of electricity per month are classified as private persons and may mine without entering the special register, though they must pay personal income tax on mined cryptocurrency. 

Larger commercial miners and infrastructure operators are required to register in Russia, submit monthly production reports, and comply with regional restrictions.

Authorities say enforcement has proven difficult. Illegal mining operations, often linked to electricity theft or activity in restricted regions, have continued to strain local power grids. 

Regions in Russia have reported outages tied to unregistered mining, prompting temporary bans during periods of peak winter demand. Officials estimate that illegal operations consume billions of kilowatt-hours annually.

Previous measures, including fines of up to 2 million rubles and equipment seizures, have failed to curb the activity. Law enforcement actions have included arrests of utility employees accused of facilitating illegal mining and the shutdown of large-scale farms.

The draft amendments were published on Dec. 30 and are open for public consultation.