The Russian government appears poised to intensify its crackdown on unregistered cryptocurrency mining, with proposed criminal penalties that may include forced labor and prison sentences. This follows the formal legalization of the industry just over a year ago.
On Monday, the Ministry of Justice published draft amendments to the Criminal Code aimed at reclassifying various forms of illegal crypto mining from administrative offenses to criminal offenses.
This initiative arises amid widespread noncompliance with the regulatory framework that became effective in 2024, subsequent to President Vladimir Putin’s enactment of mining legislation last summer.
Despite the intention behind legalization to bring the burgeoning sector into a regulated environment, authorities report that a significant number of operators continue to evade registration and taxation. Deputy Finance Minister Ivan Chebeskov noted in June that approximately 30% of miners have registered with the Federal Tax Service, leaving the majority to operate in what officials characterize as a “gray zone.”
Severe Penalties for Illegal Mining in Russia
According to the draft law, individuals engaged in cryptocurrency mining without proper registration may face fines between 500,000 and 1.5 million rubles or up to two years of forced labor. Courts would also have the authority to impose up to 480 hours of compulsory labor in less severe infractions.
More stringent penalties would apply to large-scale or organized operations. Mining activities yielding “significant” or “especially large” income, or involving coordinated groups, could incur fines of up to 2.5 million rubles, forced labor for as long as five years, or comparable prison sentences.
Equipment confiscation and additional financial penalties would also remain potential consequences.
The current regulatory framework in Russia differentiates between small-scale and commercial miners. Individuals consuming less than 6,000 kilowatt-hours of electricity per month are classified as private persons and may mine without entry into a special register; however, they are still obligated to pay personal income tax on mined cryptocurrency.
Conversely, larger commercial miners and infrastructure operators are mandated to register in Russia, submit monthly production reports, and adhere to regional restrictions.
Enforcement of these regulations has been challenging for authorities. Illegal mining operations, frequently associated with electricity theft or activities in restricted areas, have continued to burden local power grids.
Reports from various regions in Russia have indicated outages linked to unregistered mining activities, which have prompted temporary bans during peak winter demand periods. Officials estimate that illegal mining operations consume billions of kilowatt-hours annually.
Previous attempts to address this issue, including fines of up to 2 million rubles and equipment seizures, have proven ineffective. Law enforcement efforts have included the arrest of utility employees accused of facilitating illegal mining and the closure of large-scale operations.
The draft amendments were published on December 30 and are currently open for public consultation.
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