Russia wants to locate crypto-miners

According to various Russian media, the Moscow Ministry of Telecommunications and Mass Media will try to develop its own detection system for crypto miners. There is some talk of tax breaks, either increased electricity tariffs or a maximum quota of electricity that the miners in the Russian Federation are not allowed to exceed.

The Bitcoin news from the ministries are very uneven

According to Bitcoin news reports, preparations are currently underway for new bills, which will probably be submitted to the Russian parliament on 1 February. In addition, the Ministry of Telecommunications and Mass Media (Minkomsvjas) wants to identify Miner on the basis of their electricity consumption and the volume of data typical of their activities: Also the approximate extent of the mining of crypto currencies is supposed to be recognized in such a way. How this is to be technically implemented is unfortunately not explained in the publications available online. Already in October 2017 Russian regulators announced such recognition systems. With such an extraordinarily high power consumption it is not particularly difficult to uncover the miners, the Bitcoin news were announced in autumn.

According to the news agency RIA Novosti, senior employees of the Ministry of Energy have now announced that they consider the identification to be possible but also very costly. The Ministry proposed to limit the measures to those persons who are engaged in mining on a commercial scale and thus on a very large scale. There are also people who use a lot of electricity per month in other ways. The inspection of the data streams is also very time-consuming. You can’t automatically call every user of streaming services a miner just because they transfer a lot of data. As soon as the data is transmitted encrypted with a Virtual Private Network (VPN), for example, it is almost impossible to detect the miners.

What the Bitcoin formula is used for cannot be seen from the outside

There are also considerations that crypto miners will be exempt from paying taxes for two years after registration. In principle, they should not pay sales tax, but they should pay income tax after the two-year period has expired due to the increase in value of their wallets. There is also no uniform assessment of the situation with regard to the Bitcoin formula. Deputy Finance Minister Alexei Moiseev told RIA Novosti that he could see no reason for a multi-year tax break. The Ministry of Telecommunications and Mass Media currently fluctuates between a quota system on the one hand and special electricity tariffs for miners on the other. A speaker of the Bitcoin formula however slowed down the expectations on a meeting last week. So far nobody has been able to explain to him why there should be cheaper tariffs for this group of people. Within the Russian Federation, the prices were already extremely low in former times, which has strongly promoted mining there.

At the moment it remains to be seen whether at the end of the ministries’ deliberations a relief, a neutral regulation or even a kind of state blockade policy will emerge. Should the ministers agree on a blockade, this will naturally have quite strong negative effects on the market for crypto currencies.