Months after legalising crypto mining, Russia has announced a ban on the practice "in some regions" due to electricity shortages.

According to a report in Russian state news agency TASS, Deputy Head of the Ministry of Energy of the Russian Federation Yevgeny Grabchak announced that, "mining in the near future will be prohibited at the state level in some regions."

Grabchak stated that electricity shortages in certain regions were behind the ban. "We, for example, already have scarce zones—this is the Far East, this is the southwest of Siberia, this is the South," he said, adding that capacity will be limited in those regions "until 2030."

In August 2024, Russian President Vladimir Putin signed a law allowing cryptocurrency mining in the country, where it was previously outlawed. Under the law, mining is limited to legal entities and individuals who register with the Ministry of Digital Development, with unregistered entities facing restrictions based on energy limits.

The law also permits Russian residents to trade digital currencies. It came on the heels of a bill legalizing cryptocurrency for international settlements, widely seen as an effort to circumvent sanctions imposed by Western countries.

Cryptocurrency mining involves using computers to verify transactions on a digital currency's underlying blockchain network, and forms the consensus mechanism for cryptocurrencies such as Bitcoin.

Miners have engaged in an "arms race" using increasingly powerful computers to boost their chances of receiving block rewards, with a corresponding growth in energy use.

In 2022, Putin argued that Russia had "certain competitive advantages" in cryptocurrency mining, pointting to "the surplus of electricity and well-trained personnel available in the country."

Edited by Stacy Elliott.

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