How Russian Miners Face Domestic Cryptocurrency Mining

How Russian Miners Face Domestic Cryptocurrency Mining

If a miner in Russia uses their own apartment to install cryptocurrency mining rigs, they open themselves to plenty of pain points and risks. How do Russian miners cope with the problems of private mining? Let’s find out.

Also read: BitMEX CEO Responds to Claims of Impropriety

Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts

Mining Hotels

Mining hotels allow people to overcome the troubles of home mining by renting out space for users’ rigs. The owners must have energy sources, fire alarms, high-speed internet, and cooling systems.

Moreover, most of Russia’s mining hotels have guards, but renters typically have a right to enter the buildings almost 24/7.

During Q1 2018, the domestic demand for mining hotels saw six-fold growth in the nation per Blockchain for Lawyers, a group of Russian legal analysts. As for the prices for such rentals, they vary from 2,800 to 6,500 rubles a month ($43 USD to $98 USD).

Equipment Import Restrictions

At the beginning of 2018, Bitmain’s Antminer S9 rig was priced around $1800 in Russia, and during the summer it dropped to $400 per device.

However, in March 2018, the nation’s federal customs service introduced new import regulations that made mining equipment slated for additional costs.

GPUs, or graphics card-based rigs, are now imported as usual if you declare them as “motherboard accessories,” while specialized ASICs need to have a license from the domestic Minpromtorg — Russia’s Ministry of Industry and Trade.

Russian miners

That license in turn requires a Federal Security Service (FSB) warrant on the import of encryption-centric devices. Also, in order to receive their gear, miners will need to submit an application to the United Registry of Imported Encryption/Decryption Devices.

Juridical Base and Taxes

Russia has been constantly tinkering with its cryptocurrency regulations since the beginning of 2018.

Presently, while lawmakers there prepare even stricter regulations, domestic miners are already obligated to pay a 13 percent default income tax on their crypto enterprises.

Under this system, an exchange or selling of mined crypto is considered by law as an act of money making, a dynamic that brings increased legal burdens for Russian miners.

Energy Consumption

Electricity infrastructure is something that has been a big economic priority in the nation in recent years. Now, the country even suffers from power overproduction — an abundance of electricity that could be solved via state-grade centralized bitcoin mining farms or a decentralized network of small mining hotels.

As for costs, Russia has a broad choice of electricity fee rates from region to region.

For instance, in the warm Irkutskiy Autonomous District, you will pay one ruble per kWh. As another example, the Chukotsky Autonomous District will charge you eight rubles per kWh, though the region’s cold climate allows for the waiving of temperature-control installation costs.

How Russian Miners Face Business Difficulties
Chukotsky District dancers. Image via Wikimedia.

Also, before using a mining hotel or any electricity provider, Russians must make sure they use legal electrical lines and are not exceeding allowed monthly usage limits. Suspiciously cheap or expensive mining hotel costs should raise doubts over these operations’ legitimacy.

Taking Stock and Looking Ahead

As miners are becoming increasingly tracked in Russia — both by authorities and criminal elements — many miners avoid listing themselves in any unofficial or official documents linked to cryptocurrency-related activity.

For some, the associated and possible headaches aren’t worth the trouble. For others, following the rules is straightforward enough if proper precautions are taken. And of course there are those Russian miners who are going to mine discreetly regardless of whoever wants to come after them.

An important thread to watch will be how the mining landscape in the nation changes over the next 10 years.

What are your solutions for Russian miners or for those generally living in totalitarian countries? Let us know your tips in the comments section below.


Images by Jeff Fawkes, Wikimedia

Related News