Cryptocurrency mining wanted to be recognized as an industry: what’s the catch

The largest market player turned to Manturov with an official offer

Cryptocurrency mining was proposed to be recognized as an industry. The largest player in the market applied to the Ministry of Industry and Trade with such an initiative. The idea was supported by the State Duma Committee on the financial market. The initiative will be included in the bill on regulation of the sphere, which is planned to be adopted in 2023.

Why is it necessary to secure the legal status of cryptocurrency in the country? Oleg Ogiyenko, the author of the proposal, Director for Interaction with Government Agencies of BitRiver, told about this to MK.

If we take the cryptocurrency mining market, then Russia is in second place in terms of bitcoin hashrate (hashrate is an indicator of mining performance, speed). From 13 to 15% of the global hashrate of bitcoin, that is, the computing power of this cryptocurrency, is concentrated in Russia. This is largely a consequence of the competitive advantages that Russia has in industrial mining. President Vladimir Putin spoke about this. According to him, Russia has affordable and predominantly green carbon-free energy resources, trained personnel and a cold climate. All this together gives our country sufficient advantages in the competition with other countries in mining.

Meanwhile, the legal status of cryptocurrency in the country is still not really defined. The miners themselves can be divided into legal and so-called gray miners, whose activities affect both ordinary citizens and regional budgets. Cryptocurrency mining is not prohibited in Russia, but there is no legal framework regulating this type of activity yet.

The head of the State Duma committee on the financial market, Anatoly Aksakov, said that the second and third readings of bills on mining, experimental legal regimes, and taxation of miners could pass in the autumn session.

“The corresponding market must be legalized, since there is a business that is already working in this area,” the deputy said.

Indeed, mining is now an active and rapidly developing industry in the global market. According to market players, in April the Russian mining industry ranked second in the world, behind only the United States. At the same time, already in July, it caught up in growth rates with the American mining industry.

Oleg Ogiyenko, director for government relations at BitRiver, told MK about the essence of his proposal.

– Why give mining the status of an industry?

– This will make it possible to take into account its development in strategic planning documents in the field of industry and energy, thanks to which it will be possible to form investment programs of industry entities more efficiently and effectively. Also, the recognition of mining as a separate industry will make it possible to implement the most balanced mechanism for taxing mining activities: from profit at the time of sale of products, that is, when selling the produced cryptocurrency for rubles. In addition, when mining receives the status of an industrial activity, it will help in some cases to qualify for concessional project financing and other preferences, taking into account the balanced growth of the industry.

– Was there a corresponding request from the market?

– The request from the mining market for such recognition has long existed, since this recognition will greatly help attract high-tech institutional investments in industrial mining. We see how energy-intensive computing for the purpose of producing cryptocurrency on an industrial scale is gaining qualitative growth in a number of countries in the Middle East, Asia, and we believe that Russia also has every chance to realize its competitive advantages in industrial mining, giving an additional impetus to the digital economy.

– If the proposal is supported, how will mining in Russia change?

– The prospects for fixing this initiative in regulatory legal acts depend on the perception by regulators and the state of the predictive complex impact of industrial mining on the Russian economy and the population as a whole, on the development of the financial sector, information technology, energy and science in particular.