The Russian justice ministry has prepared harsh new penalties for miners minting cryptocurrencies outside the law.
The measures aimed at curbing illegal mining activities across the country include hefty fines, “forced labor” and even prison sentences.
Moscow to prosecute illegal miners under updated criminal law
The Ministry of Justice in Moscow is proposing amendments to the Criminal Code and the Criminal Procedure Code of the Russian Federation, intensifying the fight against citizens involved in illegal cryptocurrency mining.
The Bitcoin-related activity was officially legalized and regulated in late 2024, but the bigger part of the industry remains in the shadows, with many mining enterprises avoiding registration with Russia’s tax authority and some minting coins on stolen electricity.
The justice department now wants their operators punished. According to the draft changes posted on Russia’s Official Internet Portal of Legal Information, a new article – “Illegal mining of digital currency and the activities of a mining infrastructure operator” – will be added to the criminal code.
It introduces monetary penalties of up to 1.5 million rubles (over $19,000), mandatory community service that may reach 480 hours, and forced labor for up to two years for “conducting digital currency mining by a person not included in the register of persons engaged in digital currency mining.”
Up to five years of imprisonment awaits those who make particularly large profits or participate in organized crime groups mining digital currencies in breach of the rules, the Interfax news agency reported Tuesday.
The document highlights the measures are targeting actions that “cause significant damage to individuals, organizations, or the state, or are associated with the generation of a large amount of income” – 3.5 million rubles or more (almost $45,000).
Crimes committed by organized groups or inflicting large-scale financial damages and generating large amounts of income, in excess of 13.5 million rubles (over $172,000), will result in even tougher penalties.
These “shall be punishable by a fine of 500,000 to 2.5 million rubles, or an amount equal to the convicted person’s wages or other income for a period of one to three years, or by forced labor for up to five years, or by imprisonment for up to five years,” the new article continues.
Russia makes good on promises to criminalize illegal mining
Russian authorities legalized and regulated cryptocurrency mining with a dedicated law that went into force on November 1, 2024. It allows legal entities, sole proprietors and private individuals to engage in the activity.
The first two categories, as well as mining infrastructure operators, are required to register their businesses and equipment with the Federal Tax Service (FNS) and pay taxes.
The registration is not mandatory for amateur miners using less than 6,000 kWh of electricity monthly. All of them are obliged, however, to report the minted cryptocurrency to the government.
While the legalization helped Russia tap into the profits of an industry that utilizes its competitive advantages in mining, such as abundant energy resources and cool climates, growth in the sector has also caused some headaches.
At the end of May this year, the FNS announced its register lists 1,000 enterprises. Later estimates suggest less than a third of all mining firms have announced their activities to the state. And then the number of active crypto farms was estimated at close to 200,000.
Meanwhile, the increasing concentration of mining facilities in some parts of the vast country, both authorized and underground, led to power shortages and was met with temporary or permanent restrictions in about a dozen regions.
Earlier in December, the Russian government made it clear it intends to criminalize illegal crypto mining, as reported by Cryptopolitan.
The initiative to introduce criminal liability for miners who steal electric power and administrative liability for lesser offenses was made public by Deputy Prime Minister Alexander Novak.
Later this month, Russian press reports revealed the executive power in Moscow is expediting a plan to bring more of the country’s economy out of the shadows, which is specifically targeting crypto mining among other activities.
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Source: https://www.cryptopolitan.com/russia-to-punish-illegal-crypto-miners/
