Russian Ministry of Justice Proposes Strict Penalties for Illegal Bitcoin Mining

Summary:
Russia is taking strong measures to combat illegal Bitcoin and cryptocurrency mining. The Ministry of Justice has drafted proposals that would impose serious criminal penalties on unauthorized mining operations. This initiative follows a year after cryptocurrency mining became legal in the country and aims to address ongoing violations by enforcing stricter regulations.

Key Takeaways

The Russian Ministry of Justice is proposing severe penalties for unauthorized Bitcoin mining.
Proposed penalties include fines, compulsory labor, and prison sentences for offenders.
A new offense will specifically target mining activities conducted outside the legal framework.
The legislation defines income thresholds for determining the severity of violations.
Compliance with mining regulations has been low since legalization, prompting stronger enforcement measures.

Russia and Bitcoin

Stricter Penalties for Unauthorized Mining Activity

Russia is gearing up to intensify its crackdown on illegal Bitcoin and cryptocurrency mining. The Ministry of Justice has unveiled proposals that would impose severe criminal penalties for unauthorized mining, which may include hefty fines, compulsory labor, and potential prison sentences. This initiative follows Russia's formal legalization of cryptocurrency mining a year ago, and it seeks to tackle ongoing breaches of the law. The proposals have been published on the Official Internet Portal of Legal Information, indicating that they are now entering the legislative review phase.

At the heart of this initiative is the establishment of a new criminal offense explicitly prohibiting digital currency mining that occurs outside the state registration system. This provision will also apply to operators of mining infrastructure who fail to meet existing regulatory requirements. Officials assert that stronger enforcement mechanisms are essential, as voluntary compliance has remained limited despite the regulatory framework becoming law.

Proposed Penalties for Unregistered Mining

According to the draft amendments, individuals who mine without proper registration could face fines of up to 1.5 million rubles. Additionally, courts would have the authority to impose up to 480 hours of compulsory labor or sentences of up to two years of forced labor. These penalties aim to discourage small and medium-sized mining operations from continuing to operate illegally. For more severe violations, lawmakers are considering significantly harsher penalties. Reports indicate that prison sentences of up to five years could be applicable in cases involving substantial profits or organized criminal activity.

Specific Income Thresholds for Penalties

The proposed legislation sets clear financial thresholds to classify mining activities as criminal. "Significant damage" or "large income" is identified as earnings of at least 3.5 million rubles. Penalties become even more severe when offenses involve organized groups or income surpassing 13.5 million rubles. In such situations, courts may impose increased fines, extended forced labor, or prison sentences of up to five years—the specifics will depend on the scale and circumstances of each case, allowing judges some discretion.

Legal Mining Framework Established in 2024

This enforcement strategy builds on Russia's cryptocurrency mining legalization law, which came into effect on November 1, 2024. The law enables mining by companies, sole proprietors, and individuals. However, businesses and mining operators must register with the Federal Tax Service and pay corresponding taxes. Individuals consuming less than 6,000 kilowatt-hours of electricity monthly are exempt from registration but are still required to declare their mined digital assets. This framework aims to formalize the mining sector while maintaining opportunities for small-scale miners.

Ongoing Compliance Challenges

Despite the introduction of new regulations, compliance remains low. By May 2025, the Federal Tax Service reported only 1,000 registered mining enterprises nationwide. Further estimates suggested that fewer than one-third of mining operations had disclosed their activities, with approximately 200,000 crypto farms in operation—underscoring the scale of unregulated mining. Many of these facilities have been associated with tax evasion and unauthorized electricity use.

Increased Enforcement Due to Energy Strain

The rapid growth of mining operations has also added significant pressure to regional power grids. Both legal and illegal mining facilities have contributed to electricity shortages in various areas. In response, officials have enforced temporary or permanent restrictions on mining in about a dozen regions. These energy challenges have intensified the government's focus on enforcement, positioning illegal mining as a threat to both fiscal oversight and critical infrastructure.

Political Context and Future Implications

The proposed criminal penalties align with previous government statements regarding cryptocurrency mining. Notably, Deputy Prime Minister Alexander Novak announced plans to introduce criminal liability for electricity theft related to mining activities back in December, along with administrative penalties for minor infractions. Recent reports in Russian media indicate that authorities are accelerating efforts to target shadow economic activities, with crypto mining as a key focus area.

Moving Forward

If the Ministry of Justice’s proposals are enacted, they will significantly increase the risks for unregistered miners. Overall, these measures reflect Moscow's commitment to fully incorporating cryptocurrency mining into the formal economy while ensuring stable tax revenues and energy conservation.

Disclaimer: This content is for informational purposes only and should not be interpreted as financial advice. The views represented in this article may reflect the author's personal opinions and do not represent the opinion of The Crypto Basic. Readers are encouraged to conduct their own research before making any investment decisions. The Crypto Basic assumes no responsibility for any financial losses.