Quite often, users ask our editorial staff questions about whether mining is legal in Russia (RF) or not, whether there are any specific laws on mining in Russia from 2022, whether it is legal to mine cryptocurrencies or not, and many other questions. Mining in Russia and other countries is regularly turned on either red or green. Either the prosecutor's office is excited, or not. At the same time, there are mining hotels, exchangers, some even accept cryptocurrency, while others are afraid that it is not allowed.
The more bans, the worse it is for people and the economy. The mad printer, the prosecutor's office and the like do not produce added value, do not pay taxes on it to the budgets, but they interfere with the production of others. Those states where it is allowed are moving forward, while the rest are lagging behind.
In Russia, those who are brave and who can go forward go forward. Let's talk here about how to engage in mining in Russia and remain within the legal framework. Formally, everything related to the cryptocurrency market is not prohibited, but it is also extremely difficult and unprofitable for businesses to use them.
Is it legal to mine Bitcoin?
Is mining in Russia legal or not? Is there a penalty for mining in Russia? Mining in Russia is not prohibited. Anyone can buy or rent mining equipment and mine. Prohibitions and restrictions apply to the import of such equipment. It is encrypted, so the law comes into force here - the equipment must be approved by the FSB.
It’s good if anyone who decides to mine is an individual or individual entrepreneur. You can legally pay tax. If you suddenly decide to do this by selling cryptocurrency, you are unlikely to be very interested.
If you are a legal entity, you need to be careful. You can’t just spend money on mining and then cash it out or use it for payments. Although the markets in Moscow where the Chinese trade actively take advantage of this. In the markets everything is for cash.
A legal entity can, in theory, mine, then sell what was mined, or better yet, simply sell the lease of computing power in the amount required for mining the required amount, and pay taxes on the difference. In essence, the legal entity leases equipment. Absolutely legal business. If you try to make transactions with cryptocurrency, then the chances of getting questions and breaking something increase many times over.
Details about the law prohibiting cryptocurrencies
At the end of July 2022, the State Duma adopted the law “On Digital Financial Assets” in the third reading, which was signed by V.V. the next day. Putin. It is worth noting that a number of related documents were still sent for revision.
What the law prohibits and is it now possible to buy and sell bitcoins:
- Cryptocurrency is property, not money. Buying and selling goods using crypto coins is prohibited.
- Officials are prohibited from owning any cryptocurrencies, but an ordinary citizen has every right to do so. But he is required to declare his income.
- Issuing your own tokens is prohibited. To launch a blockchain project, you must obtain permission from the Central Bank of the Russian Federation.
For a long time, legislators could not close the issue of cryptocurrency exchange. As a result, the figure was fixed at 600 thousand rubles. A citizen who exceeds the turnover of funds by this amount is obliged to report to the tax service.
Where to start for a beginner
Naturally, from self-education. The first thing you should do is just read as much as you can on the topic of mining. It’s only worth reading trusted resources, like Wikipedia and Habr, where there are user comments.
Next, you need to register the wallets of the cryptocurrencies that you are going to mine. Try to buy, transfer, sell small amounts.
You can look for someone with experience among your friends or contact a mining hotel, where they will help you with advice for free, and for money they will take over the administration of your equipment. But do not forget that you will have to think and store access yourself.
One person lost his bitcoins by placing access to his wallet on a virtual server where another person had access. Another left the default ssh access passwords and did not change them. As a result, for some time his equipment mined cryptocurrency for the hackers’ wallet.
Security is inversely proportional to convenience. Those people who help you set up and monitor your equipment should not have access to your wallet.
What to consider when shopping overseas
It is officially allowed to pay with cryptocurrency. However, if the product is purchased from a foreign seller, it is important to consider several points. According to Yuri Brisov, first of all you should look at the law of the country where the product or service is offered; and additionally - on your own. If, for example, a user pays with cryptocurrency to China, then both he and the seller are violating the law, since such circulation is completely prohibited in China.
Strengthen the crypto
Photo: Depositphotos/peus
According to Artem Tolkachev, for ordinary users this provision does not seem significant, since many transactions are not transparent.
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— There are two sides of the Moon - white, adjustable, and gray. In the first case, you come, for example, to the American exchange Coinbase. This is an established institution that has a license, is controlled from above by a supervisory authority, and so on. But this is not the classic path for crypto. On the gray side of the Moon, interaction occurs in a "beep-beep-beep" manner. Most often, the operation is executed through a smart contract, on which the money simply lies. In whose jurisdiction it is is unknown.
When to mine
The topic of crypto regularly pops up in waves after the next leap.
The penultimate wave of mining was in 2022. At the end of last year another boom began.
You need to mine while the equipment is cheap. Last fall, you could buy slightly outdated equipment that cost almost nothing. In the spring, the price of this equipment became more expensive than new equipment 2-3 years ago.
Using the Manli P106 video card as an example: in December 2019 it could be bought for 2500 rubles, now for 2000 rubles, in December 2022 a new one cost 14,500 rubles.
Mining takes a long time, 3 years or more. For those who mined 10 years ago or even 4 years ago, it really doesn’t matter if Bitcoin fell by 50% or even 70%.
It's like being on the stock exchange here. If it falls, you need to buy more. Grows - sell. And many do the opposite: they buy at growth peaks and sell at declines.
Belarus
Regulation of the crypto market
In March, the State Control Committee, the National Bank and the Government of Belarus proposed to clarify legislation regarding transactions with digital assets in order to prevent money laundering, terrorist financing and other criminal activities.
It is proposed to entrust control over the activities of bitcoin exchanges to the administration of the Hi-Tech Park, on the territory of which framework conditions for the circulation of cryptocurrencies and tokens have been in force since March 2022.
Mining
The Ministry of Energy of Belarus began to study the prospects for mining, and in the fall it allocated miners to a separate tariff group.
How much does mining cost in 2022?
The cost of equipment is recovered in 1–2 years. If you bought it before the growth wave, you can recapture it in a few months. You can find out current electricity tariffs on the Mosenergosbyt website. See for legal entities.
It’s some kind of strange policy that rates for legal entities are higher than for individuals. Legal entities buy in bulk. Wholesale is always cheaper. And the most important thing is that legal entities mean jobs and taxes.
In addition to electricity tariffs, calculate the rental of premises, staff salaries, communication costs, and cooling costs. Calculating the cost of placing a 1 kW farm in a commercial data center might look like this:
(6.3 x 730 x 1.35 930 1017) x 1.10 = (6208 1947) x 1.10 = 8970 ₽, where:
- 6.3 ₽/kWh – electricity tariff;
- 730 hours – average number of hours per month;
- 930 ₽ – total expenses for rent, internet, security and other depreciation expenses;
- 1017 ₽ – total labor costs, including round-the-clock duty shift of engineers;
- 1.10 – the organization’s profit rate is 10%.
Uzbekistan
Regulation of cryptocurrency turnover
In November, the National Project Management Agency under the President of Uzbekistan allowed trading in digital currencies. Residents will be able to buy, sell and exchange crypto-assets on licensed exchanges for national currency. Non-residents can trade for foreign currency.
The document also establishes the possibility of legal entities issuing tokens and placing them on exchanges. Unsecured tokens are prohibited from being placed on sites. It is still not possible to use digital currencies as a means of payment within the country.
Partnership with China
In the same month, Red Date Technology, the company behind the development of the state-owned Chinese platform Blockchain Service Network (BSN), announced its expansion to Uzbekistan.
Thanks to the agreement, local blockchain application developers will be able to take advantage of the BSN, which unites networks such as Ethereum, Algorand, Polkadot, Tezos, Quorum, Corda and others. The initiative addresses key challenges in ensuring blockchain interoperability and reducing costs.
Where to mine
You need to mine in a safe place. You can mine yourself - but for this you need to bother, and there are many nuances that you need to learn about in detail. Data centers are among the most reliable because they have existed for a long time, have a large number of clients not related to mining, and do not depend on fluctuations in the cryptocurrency market. Data centers have serious experience in organizing server rooms. You can be sure that communication channels are reserved, and you will not find yourself in a situation where, due to the failure of a single channel, your equipment will be idle. Industrial cooling systems are also used in data centers.
The best thing to do is to first look at the reliability of the company. How many years has it been in existence, what are the reviews, does it work via bank transfer and electronic document flow, does it accept bank cards for payment, what is the average number of employees, percentage of taxes on turnover, court cases, management contacts, communication licenses.
Kyrgyzstan
Regulation of Bitcoin exchanges
In February, the National Bank of Kyrgyzstan announced plans to license cryptocurrency exchange operators.
In August, the State Service for Regulation and Supervision of Financial Markets developed a draft regulation on the activities of cryptocurrency exchanges. It establishes the status, functions, rights and obligations of trading platforms, as well as the requirement for their mandatory registration in the Unified State Register.
The project also provides for the responsibility of exchanges in terms of combating the financing of terrorist activities and money laundering.
Mining
For 2021-2025, the country has established increased energy tariffs for miners.
Armenia
Regulation of the crypto market
In March, Armenian representatives in the Eurasian Economic Union, along with other member states, were unable to reach a consensus on the need to “harmonize” regulation of the crypto market in their territories.
Cryptocurrencies are listed in the law “On the confiscation of illegal property” among assets subject to seizure, but their definition in the Civil Code is still not spelled out. One of the candidates for the Council of the Central Bank of Armenia drew the attention of the parliament to this. In order to avoid discrepancies, he advised to legislate this term, including for tax purposes.
Disclaimer The following five countries in our review have low cryptocurrency activity, according to data from analytics company Chainalysis. Little is known about the legislative regulation of the industry in them.
Turkmenistan
Regulation of the crypto market
Turkmenistan is one of the most closed states in the world. There is practically no official data on the economy of this country in the public domain. There is also no information about the legal status of cryptocurrencies and blockchain.
Over-the-counter markets are poorly represented. Virtual currencies can only be purchased with US dollars, but the government has been restricting access to foreign currencies for local companies and citizens since 2016.
Turkmenistan ranks 140 out of 157 in the 2022 Global Cryptocurrency Adoption Index from Chainalysis.
Mining
In the summer of 2022, Ashgabat police conducted raids at points of illegal sale of currencies. According to local media reports, security forces were looking for cryptocurrency miners.
Estonia
Licensing of crypto companies
At the end of September, the Estonian Ministry of Finance presented a bill tightening requirements for cryptocurrency companies.
If approved, service providers will have to reapply for a license and pay a government fee. Control over their activities will move from the Financial Intelligence Unit to the Financial Supervision Authority.
The Ministry of Finance also discussed the possibility of suspending the issuance of new licenses until the new regulation comes into force.
The Estonian government does not yet support the idea of legalizing cryptocurrencies, despite calls from major industry players, including Coinbase. Among the reasons, the use of digital assets in ransomware attacks.
In October, the head of the Estonian Money Laundering Data Bureau (RAB), Matis Mäeker, proposed revoking all previously issued cryptocurrency licenses.
He advocated increasing the minimum required amount of share or share capital of firms involved in trading digital assets to 350,000 euros, with the clarification that the company must actually have this money in the form of cash or securities with a low level of risk and high liquidity. The owners of such companies, according to Mäeker, should be required to actually invest funds raised from clients.
Later, the department explained that they were not considering the possibility of automatically canceling previously issued licenses.
