As the Ukraine-Russia crisis deepens, the potential for energy-rich Russia to become a cryptocurrency mining hub to combat mounting sanctions is now being seriously considered by the Russian Deputy Energy Minister, Evgeny Grabchak, who wants to introduce a legal framework for mining.
Grabchak announced in a TASS report on March 26, 2022, that the “legal vacuum” for crypto mining needs to be addressed, along with potential regional mining locations using an unburdened power grid. “The legal vacuum makes it difficult to regulate this area and set clear rules of the game. This legal vacuum needs to be [eliminated] as soon as possible. If we want somehow to get along with this activity, and we have no other options in the current reality, we must introduce legal regulation, adding the concept of mining to the regulatory framework,” he said.
Bill leaves window open
In Feb. 2022, the Ministry of Finance drafted a bill on cryptocurrency regulation that left open the option to pilot a cryptocurrency mining industry, despite calls from the central bank to ban cryptocurrencies. The legislation draft defined mining as “fixed as an activity aimed at obtaining cryptocurrency,” although in reality, it is the means where nodes on the bitcoin network compete for the chance to validate a block of transactions to generate new bitcoins.
Russia has a competitive edge, says Putin
President Vladimir Putin late last month acknowledged mining risks as described by the finance ministry, but subsequently drew attention to his country’s abundant energy and skilled workforce as competitive edges that outweigh high energy demands. Russia’s western neighbor Belarus said in Jan. 2022 that it would persist with its current rules. Russia was ranked third in the world in Jan. 2022 for its share of collective mining computing power, called hashrate.
Last week, chairman of the Energy committee Pavel Zavalny suggested bitcoin be introduced as a method of payment for exports of energy to pro-Russian nations, following the European Union’s rejection of his proposal for Russian energy importers to use gold and Russia’s fiat currency, the ruble, as payment methods.
Following a call for a countrywide ban on cryptocurrency, the central bank of Russia has granted a license to Sberbank, the largest bank in the country, to trade in crypto assets.
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