Russian President Vladimir Putin has raised alarms over the rapidly expanding cryptocurrency mining sector in Russia, citing significant risks to the nation’s electricity supply. Addressing the issue, President Putin stressed the potential strain that unchecked mining activities could place on regional power infrastructures.
“Cryptocurrencies are not monetary units in the traditional sense but are increasingly being used for international settlements,” Putin remarked. He highlighted that the extraction, or mining, of digital currencies can be performed virtually anywhere, but this process demands substantial electricity.
According to the Ministry of Energy, approximately 16 billion kilowatt-hours are consumed annually for cryptocurrency mining in Russia, accounting for nearly 1.5% of the nation’s total electricity consumption. This figure is on an upward trend, driven by factors such as the relatively low cost of electricity in Russia and the mobility of mining equipment.
However, Putin pointed out the alarming implications of this growth. “Uncontrolled growth of electricity consumption for cryptocurrency mining can lead to a power shortage in certain regions,” he warned. Specific regions such as Irkutsk, Buryatia, and Zabaikalsky Krai have already experienced power shortages attributed to the surge in mining activities.
The President underscored the severity of the issue, noting its potential to disrupt enterprises, housing and communal services systems, and the development of cities and towns. Regional officials have echoed these concerns, highlighting the risks posed to new enterprises, residential areas, social facilities, and promising investment and infrastructure projects due to potential electricity supply interruptions.
In response to these challenges, President Putin called for decisive and timely actions at the federal level. “It is necessary to make the right and timely decisions, including systemic ones, at the level of federal law,” he stated. He confirmed that instructions have already been issued to regulate digital currency mining in Russia, encompassing taxation and tariff decisions.
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President Putin concluded by stressing the importance of structuring future regulatory efforts effectively. “Let’s discuss today what we have managed to do and how this work should be structured in the future,” he urged, setting the stage for a crucial discussion on balancing the benefits and challenges of cryptocurrency mining in Russia.
As the global cryptocurrency market continues to grow, Russia finds itself at a crossroads, needing to balance the economic opportunities presented by digital currencies with the infrastructural demands they impose. The ongoing deliberations and regulatory measures will play a pivotal role in shaping the future of cryptocurrency mining in Russia, ensuring sustainable growth while safeguarding the nation’s energy resources.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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