Russian ministry wants to punish illegal Bitcoin miners with hard labour and jail time

Mining Bitcoin without a valid permit in Russia will soon land you in a forced labour camp or jail.

That’s if the Ministry of Justice gets its way.

On December 29, the ministry revealed proposals for strict new punishments that await miners who steal power from public grids or mine in parts of the country where mining is banned.

The harshest punishments will be handed out “if [a miner’s] actions cause major damage to citizens, organisations, or the state, or are associated with the extraction of income on a large scale,” the ministry wrote in a draft amendment to the Russian criminal code.

Illegal crypto mining has become a scourge in Russia, with illegal miners blamed for power shortages in some of the country’s traditional Bitcoin mining hotspots, such as Irkutsk and the North Caucasus.

Lawmakers have long lamented the courts’ inability to hand out adequate sentences, with illegal miners typically escaping with fines for “improper use of electricity.”

New legal powers

The new amendment, which would need to be approved by the State Duma, proposes criminalising illegal crypto mining.

Currently, Russians are free to mine crypto in most areas, provided they do not use more than 6,000 kWh of electricity per month for their operations.

Anyone using more than this amount must register their activities with the Federal Tax Service.

The tax body collects data on the amount of coins miners accrue, with industrial miners expected to pay more than $600 million in tax per year.

But illegal crypto mining has become a sophisticated shadow industry in Russia in recent years.

Many miners use mobile units, sometimes housed in shipping containers or vans, to evade detection.

Others have bribed power officials, and, in 2019, security service officials caught two Russian Nuclear Centre staffers using a supercomputer to mine Bitcoin.

The ministry’s proposals allow courts to impose fines of up to $19,000 on convicted private miners.

Judges would also be allowed to hand out forced labour camp sentences of up to two years, regular jail sentences of up to five years, and community service orders of up to 480 hours.

Under the amendment, organised groups of miners will face higher fines of up to $32,000.

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at [email protected].