Illegal cryptocurrency mining operations in Russia cost the country 10 million rubles ($122 million) annually in uncollected taxes.
Despite legalizing the sector last year, underground crypto businesses continue to evade federal tax authorities.
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Tax evasion and hidden mining hubs
Hundreds of millions of dollars in taxes are escaping the Moscow government as income from illegal cryptocurrency mining goes unreported.
Despite Russia legalizing cryptocurrency mining last August, many informal mining operations continue to evade federal tax authorities. This widespread tax evasion is reportedly costing the country more than $122 million in lost tax revenue.
According to local media reports in Russia, most illegal mining sites are located in abandoned factories or farms in remote areas with existing power grids. Its presence is undermined by abnormally high electricity consumption and frequent grid outages.
Current mining bans and enforcement efforts
According to current legislation, companies and individual entrepreneurs must join a special registry in order to conduct mining. Civilians can mine without registration if their monthly consumption is less than 6,000 kilowatt hours. The law specifically prohibits mining by energy companies. It also prohibits entry of individuals with unexpunged histories of economic, extremist, or terrorist crimes.
Currently, penalties against illegal miners are weak. Those violations are often classified as unauthorized grid connections. The fine ranges from 10,000 to 200,000 rubles.
As reported by BeInCrypto Russia, this legal loophole will soon be closed. New amendments to the Administrative Offenses Act allow for tougher penalties for illegal mining.
Russian authorities are trying to counter unregulated mining by imposing temporary regional bans. Restrictions are in place throughout the year in the North Caucasus. Meanwhile, regions such as Irkutsk, Buryatia and Zabaikal Territory are subject to seasonal or temporary restrictions.
