Crypto mining looks a lucrative source of additional income. In 2021, Russia became the world’s third biggest crypto-miner, with the largest crypto-mines located in the country’s north and in Siberia, where the temperatures are low and there is access to cheap power. However, cheap electricity is an opportunity for unauthorized activities. Therefore, areas like Krasnoyarsk Krai and Irkutsk Oblast that have low electricity costs have become hotspots of illegal crypto activity. In particular, there were cases of breakdowns and blackouts, especially in residential areas where electrical grids are not capable of handling excessive loads.
As a result of unauthorized crypto activities that pose a threat to the financial stability of the country, Russia’s central bank proposed banning the use and mining of cryptocurrencies on Russian territory in January. According to the Bank of Russia, mining undermines the country’s green agenda, jeopardizes Russia’s energy supply and amplifies the negative effects of the spread of cryptocurrencies, creating incentives for circumventing attempts at regulation.
The Bank of Russia said:
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia. This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy. The best solution is to introduce a ban on cryptocurrency mining in Russia.”
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