But legal mining in Russia does exist.
Despite the absence of special legislation regulating cryptocurrency mining and its circulation, Russia remains one of the leaders among countries with highest involvement in digital money.
Comparing data from different sources, we can come to a conclusion that 8–10 percent of all Internet users are involved in cryptocurrencies in our country. In absolute terms, these are 5–7 million people, many of whom are not only involved in the purchase and sale of digital money, but also take part in its mining. Unfortunately, in most cases, many miners are using illegal sources of electricity, which is surprising, as there are a lot of possibilities of quite legal and stable earnings in this area.
The Russian authorities still can not decide on their attitude to cryptocurrencies, and to the process of mining in particular. The “Digital Currencies Law” remains the most anticipated document, the adoption or non-adoption of which, will anyway affect millions of Russians. The appointment of Mikhail Mishustin as Prime Minister can determine the status of digital money in Russia early as in 2020 (perhaps already in its first half), but until now, there is no final clarity on this issue.
At the same time, Russia is one of the most active participants in the cryptocurrency community. According to various estimates, from 3 to 5 percent of the country’s population is involved in activities related to the world of digital money, which is a lot. Many Russians participate in cryptocurrency mining, however the mining process in most cases is associated with violations of the law.
Over time, mining is becoming an increasingly energy-consuming type of activity. The computing power needed to maintain production levels at an acceptable level is constantly growing, and along with them, electricity bills are also growing. How to increase the economic efficiency of farms in these conditions? In the majority of cases the miners just steal electricity.
Illegal electricity consumption is detected in residential buildings, hotels, enterprises, in district and regional administrations. In 2018, the Federal Security Service revealed the fact of illegal mining even at the Russian Nuclear Center in Sarov. Damage to resource-supplying organizations varies from several hundred thousand to tens of millions of rubles. The maximum amount at the moment belongs to the miners from Ingushetia, who managed to steal 130 million rubles of electricity in 2019. The materials of all such revealed cases are passed to the court.
Depending on the damage, the offender may be sentenced to a fine or to jail detention (as is the case with employees of the nuclear center in Sarov). Of course, the energy spent on mining will also have to be paid.
The expensive equipment used to get the digital money is usually not reimbursed. It will be seized and sent to the custody warehouse as evidence in the case. If the equipment was legally imported into the country (which is a rarity itself), at the end of the trial and the sentence will be returned to the owner, but by that time it will be hopelessly out of date. At worst, equipment will simply be destroyed or sold at the price of scrap.
Such massive attempts to gain profit through mining illegally are really surprising, given that in Russia, despite the vagueness of the legal status, there is a completely legal and reliable way to mine cryptocurrencies in legal mining hotels. The owners of these huge data centers usually have special conditions for energy supply, staff providing uninterrupted operation of the equipment, reliable protection against external factors and insurance that covers many types of risks. But more importantly, mining hotel operators provide legal customs clearance for the equipment.
The issue of legalizing the income received from mining is solved by making a contract for the sale of the computing power of the tenant with a foreign company denominated in US dollars. Thus, from a legal point of view, we are not talking about mining as such, but about some export activity and foreign exchange earnings from it, which is also not subject to VAT.
