Nikolas Sargeant
The Russian Finance Ministry is exploring a new approach to taxing cryptocurrency miners, focusing on their electricity consumption rather than their token sales revenue. This move is seen as an interim solution while the government develops a comprehensive framework for taxing miners' profits.
Deputy Finance Minister Ivan Chebeskov announced on September 18 that the ministry is "considering the launch of an excise tax on electricity for miners." This proposal aims to implement an "indirect tax on the electricity miners consume" as an initial step towards regulating the burgeoning crypto mining industry in Russia.
Bridging the Gap: From Energy to Profit Taxation
Chebeskov emphasized that while taxing profits remains the long-term goal, the electricity-based tax serves as a practical intermediate solution. He stated, "Our target remains taxation on profit. This is our long-term goal. We understand that this is, in principle, the correct structure – like any [form of] business."
The challenge lies in accurately calculating miners' profits, especially given the potential for creative accounting practices. Chebeskov noted that estimating power consumption is more straightforward than assessing the value of mined cryptocurrencies, particularly when miners may not disclose all their wallets.
Legislative Timeline and Industry Impact
The Finance Ministry expects lawmakers to approve the crypto mining tax legislation by the end of the State Duma's autumn session. This development follows the recent legalization of industrial crypto mining in Russia, with industry officials expressing readiness to declare their operations and pay taxes on earnings.
President Vladimir Putin has acknowledged Russia's position as "one of the world leaders" in the crypto mining sector, highlighting its economic significance. In response to legalization, major players like Gazprom are reportedly planning large-scale mining operations, while regional initiatives, such as the construction of 15 new crypto data mining centers in the Komi Republic, are underway.
Future Prospects and Regulatory Challenges
As the Russian government fine-tunes its approach to crypto taxation, the unregulated status of cryptocurrency exchanges in the country remains a hurdle. Some policymakers have suggested establishing state-run crypto trading platforms to address this issue, although major exchanges have not confirmed any such plans.
Industry experts project that crypto mining could contribute up to 50 billion rubles ($538.4 million) in annual tax revenue by 2025, underscoring the sector's potential impact on the Russian economy. As the regulatory landscape evolves, most Russian miners reportedly continue to focus their efforts on Bitcoin (BTC) mining.
