Cryptocurrency

Crypto Mining Could Provide Russia With Competitive Advantages

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The President of the Russian Federation – Vladimir Putin – agreed with the country’s central bank that digital assets are highly volatile and pose several risks to the financial network. However, he sees potential in cryptocurrency mining as it could give Russia “certain competitive advantages.”

Not Against Mining

Last week, the Bank of Russia intensified its harsh stance on crypto by proposing a total ban. The institution argued that the asset class reminds of a pyramid scheme, undermines the sovereignty of monetary policy, and threatens the local financial system.

In a recent conference, the Russian leader – Vladimir Putin – said he is aware of the ongoing discussions on the matter and outlined that crypto regulation is currently “in the spotlight.”

Similar to the central bank, Putin stated that the expansion of the asset class carries certain risks to investors given its high volatility. On the other hand, the President is in favor of crypto mining as it could be beneficial to his nation:

“Although, of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.”

Subsequently, he urged the Bank of Russia and the local government to discuss the topic again and “come to some kind of unanimous opinion..”

Vladimir Putin
Vladimir Putin, Source: Reuters

Putin’s comments came one day after Ivan Chebeskov – a member of the Ministry of Finance – opposed the ban on cryptocurrencies in Russia. According to him, such legislation could lead Russia to fall behind in the global tech industry. As such, the government should regulate digital assets and not completely ban them, Chebeskov urged.

It’s worth noting that Russia is the third-largest country in terms of Bitcoin hash rate responsibility. Following the all-out crypto ban from China, the tides changed, allowing the US to take the lead, followed by Kazakhstan. According to Cambridge’s mining map, Russia’s hash rate share is nearly 14%.

Russian Crypto Mining Deserves Respect and Regulation

A few months ago, the Russian Ministry of Economic Development, the Ministry of Energy, and the State Duma insisted that cryptocurrency mining should be a legalized business regulated as an entrepreneurial activity.

Aleksey Minaev – Deputy Director of the Digital Economy Development of Mineka – went further, opining that the mining industry deserves “respect and regulation.” He added that if it’s legalized, the Russian state could benefit from taxes, and people’s income will be legal.

Anatoly Aksakov – head of the State Duma – reminded that cryptocurrency mining is not banned in Russia but lacks clear taxation rules. As such, he urged the local watchdogs to enhance regulatory clarity and proposed miners be charged with higher electricity tariffs than other consumers.

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