Russia continues to limit the use of cryptocurrencies like Bitcoin for payment for goods and services, in accordance with its restrictive cryptocurrency laws, such as the Digital Financial Assets Law enacted by President Vladimir Putin in 2020. Nevertheless, the Central Bank of Russia announced last September that cross-border cryptocurrency payments would be inevitable. Also, cryptocurrencies have been linked to Russia’s sanctions evasion strategy, as evidenced by the fact that US authorities have successfully detected as well as blacklisted Bitcoin and Ether addresses suspected of having been used for sales. of Russian defense equipment abroad.
However, Russia’s stance on cryptocurrencies has softened recently, as evidenced by the government’s decision to subsidize a cryptocurrency facility. cryptocurrency mining in Siberia operated by Bitriver.
This grant involved an exemption from property tax, a reduction in the income tax rate and a halving of the cost of electricity.
Thus, this initiative has allowed Russia to become the second largest country in the world to mine cryptocurrency, according to the daily Kommersant, citing Bitriver.
However, the United States remains by far the largest country to mine cryptocurrencies, with a production capacity of 3 to 4 gigawatts, while Russia reached 1 gigawatt of production capacity in January, February and March 2023. China, which banned cryptocurrency mining in 2021, was not ranked in Bitriver’s top 10.
As a reminder, regulatory concerns regarding mining and cryptocurrency exchanges have impacted various jurisdictions. Also, some governments have introduced bans or restrictions due to the use of too much local energy for cryptocurrency mining.
For example, the government of Kazakhstan imposed higher tax rates on cryptocurrency miners and shut them down during the winter months to try to reduce the load on the national power grid.
In sum, Russia continues to limit the use of cryptocurrencies for payments for goods and services, but the country has developed into a heavyweight in cryptocurrency mining, with increased production capacity and government subsidies. for installation and mining rig assembly of cryptocurrencies.
It should be noted that for Russians, cryptocurrencies remain linked to strategies for circumventing sanctions against Russia. So Russia’s stance on cryptocurrency is evolving, with signs of easing restrictions and a more favorable approach to cryptocurrency mining going forward, but that’s not guaranteed.
The Russian government could do an about-face in the coming years depending on the situation or the country’s economic policy.
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