Cryptocurrency has been the subject of intense discussions in Russia these past days. Russian President Vladimir Putin in a recent meeting noted that the country does have advantages when it comes to the mining of cryptocurrencies. In order to mine or generate a cryptocurrency, complex work-of-proof algorithms need to be solved on advanced computers. The process is power-intensive as these advanced computing machines need to be plugged in at all times.
Putin was virtually speaking to the associates of his government on January 26 when he opened his speech with the mention of crypto regulations.
“I would like to start with an issue that is currently in the spotlight — the regulation of cryptocurrencies,” Putin said.
“I am familiar with the ongoing discussion on this matter. These issues are dealt with and regulated by the Central Bank of the Russian Federation. Although, of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country,” the 69-year old Russian President added.
The price of electricity in Russia was $0.06 (roughly Rs. 5) per kilowatt-hour for household use and $0.08 (roughly Rs. 6) for businesses.
France, in comparison, charges $0.2 (roughly Rs. 15) and $0.14 per (roughly Rs. 11) per kWh of electricity for householders and businesses respectively, which is four times more expensive than Russia’s power costs.
Due to the cheap electricity prices in Russia, crypto-mining has picked pace in the country leading some of its regions to face acute power shortages.
Several residents of the Irkutsk region of eastern Russia, for instance, have set up illegal crypto mining centres in their homes, garages, and even balconies. This phenomenon is called “grey mining”.
As per the Irkutsk Electric Grid Company (IESC), the electricity consumption in the region grew by 108 percent last year. Local administrators conducted raids in the region and reportedly uncovered 1,100 cases of grey mining.
It, however, seems that Putin might be considering keeping crypto mining active in Russia, but with proper regulations and management put in place first.
He has directed the Central Bank of Russia to come to a decision regarding the crypto space after discussions with appropriate members of his government.
“The Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this area of activity,” he said. “I would ask both the Government of Russia and the Central Bank to come to some kind of unanimous opinion.”
Putin’s softer approach towards the crypto sector comes a week after Russia’s apex lender proposed a ban on all crypto-related activities citing volatility of the market and financial risks associated with it.
The crypto market crashed after this ban idea from Russia emerged online and is currently struggling to recover.
As of now, Russia’s official stance on the crypto sector remains awaited.
Meanwhile, it is estimated that over 17.3 million people or 11.9 percent of Russia’s total population, currently own cryptocurrency, as per a report by statics firm Triple-A.