Authorities in Belarus and the Russian Federation are taking steps to separate cryptocurrency miners from other groups of power users and deny them access to subsidized energy. This could lead to the adoption of differentiated electricity rates for businesses involved in digital coin minting activities.
Cryptocurrency Miners in Russia and Belarus May Face Higher Energy Prices
Entities engaged in the extraction of digital currencies in both Russia and Belarus may have to pay more for the electrical energy they need, media reports have revealed. Authorities in both countries are making changes that are likely to result in the introduction of special tariffs for this category of electricity consumers.
The idea has been recently backed by the Russian Ministry of Energy. Crypto miners should not pay for the electricity they use at the rates intended for households, the head of the department Nikolai Shulginov told reporters on the sidelines of the Russian Energy Week. Quoted by the business news portal RBC, Shulginov noted that the ministry is now working on the issue and stated:
To maintain the reliability and quality of power supply, we believe it is necessary to exclude the possibility of electricity consumption by miners at tariffs for the population.
The government official made it clear that electricity rates need to be differentiated. In his view, miners should not be allowed to take advantage of the preferential tariffs as the current situation can deteriorate further. Otherwise, cross-subsidization has to be increased which would be unacceptable, the energy minister elaborated.
Shulginov’s comments came after the governor of Irkutsk Oblast, Igor Kobzev, recently complained to Russia’s deputy prime minister responsible for the fuel and energy complex, Alexander Novak, about illegal crypto miners. Their actions, Kobzev said quoted by the business daily Vedomosti, increase the load on the power grid of the Siberian region and the risk of breakdowns at the local power plants.
Irkutsk is the region which maintains the lowest electricity rates for households in Russia – 1.23 rubles (less than $0.02) per kilowatt-hour (kWh) in the cities and 0.86 rubles (a little over $0.01) in rural areas. The governor revealed that this year power consumption is projected to grow by almost 160% over last year’s figure.
While the total electricity used in Irkutsk averaged 5.9 billion kWh in the past four years, just in the first half of 2021 it reached 4.7 billion kWh. In a social media post, Kobzev announced his proposal to recognize digital currency mining as an entrepreneurial activity and introduce special rates for electricity consumers involved in coin minting operations.
Meanwhile in neighboring Belarus, with which Russia maintains strong political and economic ties, the Ministry of Energy has already classified cryptocurrency miners in a separate tariff category. The decision is part of a joint decree with the Ministry of Antimonopoly Regulation and Trade issued at the end of September.
According to the document quoted Forklog, entities involved in data processing, information services and related activities, including the operators of mining facilities and data centers, will fall into this category if their annual electricity consumption is at least 25 million kWh. The tariff category has four subgroups depending on the consumption bracket with the top one covering enterprises consuming power exceeding 500 million kWh. Additional groups can be added by President Alexander Lukashenko’s administration. The current document does not mention the exact price rates for each group.
Belarus legalized mining and other crypto-related activities with a presidential decree that came into force in March 2018. Earlier this year, the Belarusian leader called for clarifying certain regulatory provisions and establishing stricter control over the crypto space. Lukashenko has had a positive attitude towards crypto mining, urging Belarusians in August to mint digital coins instead of picking strawberries on foreign farms. In 2019, he suggested to power mining facilities using surplus electrical energy from the country’s new nuclear power plant.
In Belarus’s energy-rich ally, the Russian Federation, the idea to recognize cryptocurrency mining as a type of entrepreneurial activity has been gaining support among government officials. In September, the chairman of the Financial Market Committee at the State Duma Anatoly Aksakov expressed his position that that the mining of digital currencies should be registered as such and taxed accordingly.
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