Putin Backs Crypto Mining After Regulator Wanted Ban

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President vladimir putin supports a proposal by the russian government to tax and regulate the operation of cryptocurrencies, rejecting the central bank's proposal completely, according to three people in the know.

Putin supports it, this would enable mining to continue, like russia has many areas with excess power, including irkutsk, krasnoyark and karelia, people have said, request to be unidentified because the information is not public.  

Kremlin spokesman dmitry peskov refused to say what Putin's position was and said that the president ordered the government and central bank to work on their differences. 

The central bank press office, in response to questions, criticized a department of finance proposal to allow cryptography in certain cases, which she said would create "a huge risk to financial stability through which banks and other market participants could infect the entire financial system." comments did not mention mining.

The government press office has not responded to a request to comment on the status of the talks. 

Putin’s position is good news for an industry that has suffered numerous setbacks recently, including China’s complete ban last year and Kazakhstan temporarily unplugging miners this week as the country faced blackouts. Russia became the world’s third biggest crypto miner in 2021, after the U.S. and Kazakhstan, according to Cambridge University data released in October. 

The President's support, combined with his public comments this week, means that the proposals are likely to be approved. Putin on Wednesday called on the government and the central bank to reach an agreement shortly on how to regulate cryptography. 

"We also have some competitive advantages here, particularly in so-called mines," Putin said at a government meeting, while acknowledging the risks associated with cryptography. "I mean excess power and well-trained personnel available in the country."

Bitcoin mining, the world's most valuable cryptocurrency, requires special computers that work to solve complex encrypted problems, and the greatest operating expense for the company is electricity.

Russia has a number of areas that have an excess of electricity because of the abundant supplies of hydroelectric power plants or because the energy-intensive industrial facilities of the Soviet era have closed. 

Vitaliy borschenko, co-founder of russian minor bitcluster, said the miners were invited to join a government task force after the central bank issued its report proposing a blanket ban on cryptography.

“Most ministries and agencies are against radical measures,” Borschenko said.

— With help from Yuliya Fedorinova.