The Russian government has banned cryptocurrency mining in ten regions, effective January 1, 2024, and lasting until March 15, 2031. This decision comes in response to concerns over the high energy consumption associated with crypto mining. As mining operations have grown, their energy demands have become significant, contributing to a noticeable strain on energy resources. According to reports by the state-owned news agency Tass, mining operations already account for nearly 2.5 per cent of energy use in the United States, highlighting the substantial impact of the industry on power supplies.
The Russian Council of Ministers stated that this initial six-year ban will focus on the regions with the highest energy usage, but it could extend further. If necessary, additional bans might be implemented during peak energy demand periods. Conversely, if an official commission reviews energy consumption patterns and determines that changes are warranted, the government has not ruled out lifting or adjusting the ban in certain regions.
Crypto mining’s growing energy demand and global impact
Cryptocurrency mining has become widespread, but its environmental and energy costs are significant. Mining operations require vast amounts of electricity to run the necessary hardware, particularly in large-scale operations. In countries like Russia, where energy consumption is already high, the growing demand for crypto mining has raised alarms over potential shortages or increases in power costs.
Since November 1, 2023, cryptocurrency mining has been legal in Russia, but miners must adhere to strict regulations. These include registering with the Ministry of Digital Development and ensuring compliance with energy consumption limits that are continually monitored. However, the country’s relationship with cryptocurrency has been complicated. While mining is legal, Russia banned cryptocurrencies as legal tender in 2022, although it still allows cross-border payments. The use of crypto for international transactions is largely viewed as a way for Russia to bypass economic sanctions in the aftermath of the invasion of Ukraine.
Other countries follow Russia’s lead on crypto mining bans
Russia’s decision is not an isolated case. Other countries have also implemented or are considering restrictions on crypto mining due to its energy demands. In 2022, Kosovo banned the practice in response to an energy crisis. Similarly, Angola introduced a ban on crypto mining in April 2024, going as far as criminalising the activity. Several European nations, including Iceland and Norway, have introduced strict regulations on the industry due to ongoing energy shortages. These moves underscore the growing concern about the environmental and economic impact of cryptocurrency mining on energy resources.
The global trend of regulating or banning crypto mining reflects the increasing recognition of its heavy energy consumption and the need to balance technological progress with sustainable resource management. As countries like Russia, Kosovo, and Angola take steps to curb energy usage, the future of crypto mining remains uncertain, with potential shifts in both regulation and technology on the horizon.
