Russia legalizes crypto mining activities after President Vladimir Putin signed a bill approved by the country’s lawmakers last month.
The law will go into effect in November 2024, and it will permit regulated mining firms to mine crypto assets after registering using a state database.
The ascent of the bill into law comes as Russia continues to grapple with heavy Western sanctions. The country is the most sanctioned in the world following the invasion of Ukraine and was even kicked out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The country anticipates that supporting crypto activities will help streamline cross-border payments. Bitcoin will also help the country reduce its reliance on the US dollar for international trade.
Russia Legalizes Crypto Mining With Pro-Crypto Bill
The new crypto mining bill in question caters to both large and small miners. Large mining firms will be required to mine crypto assets after completing registration. However, small miners will not be mandated to register as long as they do not surpass a certain energy consumption threshold.
The Bank of Russia and the Ministry of Finance will have oversight over the crypto-mining industry. Several government ministers will also be involved in crafting more precise regulatory guidelines in the coming months.
Putin said,
It is important for Russia not to miss the moment, set up the legal framework and regulation in a timely manner, develop infrastructure, and create conditions for the circulation of digital assets, both within the country and in relations with foreign partners.
The signing of the bill into law makes Russia one of the few countries that have officially legalized crypto mining activities. However, the bill has also attracted criticism as the government will have more control over mining activities.
The development triggered gains for Bitcoin that recovered above $60,000 after dropping to around $49,000 earlier this week. BTC was trading at $60,660 at the time of writing after a 5.4% gain in 24 hours.
Bitcoin Mining Difficulty Hits All-Time Highs
The recent entry by Russia into the Bitcoin mining industry also comes as the Bitcoin mining difficulty hit record highs.
Bitcoin mining involves solving complex mathematical functions to secure the blockchain. When the mining difficulty is high, more energy and computing power are needed to confirm transactions.
The rising hash rate affects miner profitability margins. Therefore, miners are more likely to hold BItcoin, especially after the recent price drop, in anticipation of a bull market to increase the profit margin on the mined coins.
The miner difficulty has also soared a few months after the Bitcoin halving event that happens every four months. The halving event slashed miner rewards by half, further affecting miner profit levels.
