Russia Considers Prison Time for Unregistered Crypto Mining Activities

Russia's Ministry of Justice has proposed new criminal penalties for illegal crypto mining. The proposed laws could impose fines up to 1.5 million rubles and prison time of up to 5 years for significant offenders, particularly large-scale operations that do not register with the Federal Tax Service.

Key Takeaways

New Legislation: Proposed amendments introduce fines and prison sentences for unregistered crypto mining.
Fines and Penalties: Individual miners generating over 3.5 million rubles could face fines and forced labor.
Organized Crime: Heavier penalties await organized groups with profits exceeding 13.5 million rubles.
Tax and Regulation: The mining industry has moved towards legality through registration and taxation, but illegal mining still thrives.
Economic Impact: Russia's crypto mining industry plays a significant role in the economy and foreign exchange despite regulatory challenges.

Russia Proposes Prison Time for Illegal Crypto Mining Operations

Overview of New Criminal Penalties for Crypto Mining

The Russian Ministry of Justice has put forward serious penalties aimed at unregistered crypto mining, which include hefty fines reaching up to 1.5 million rubles and prison terms of up to 5 years for large-scale operations. These proposed changes are part of new amendments to the Criminal Code and target those miners who are not registered with the Federal Tax Service, a system initiated on November 1, 2024, when the mining sector was officially legalized in Russia.

Under this draft legislation, encapsulated in Article 171.6, sanctions will vary according to the severity and organization of the offense. Miners whose activities cause extensive damage or who earn more than 3.5 million rubles are subject to fines, compulsory labor for up to 480 hours, or two years of forced labor.

Increased Penalties for Organized Mining Operations

Larger operations with revenues exceeding 13.5 million rubles will face stiffer penalties, including fines ranging from 500,000 to 2.5 million rubles, forced labor for up to 5 years, or imprisonment for the same period, alongside additional fines that can reach up to 400,000 rubles. This legislative initiative follows statements from Deputy Prime Minister Alexander Novak regarding plans to introduce criminal liability for illegal mining and unlicensed lending in 2026.

Image of Deputy Prime Minister Alexander Novak

As Russia strives to regulate mining through mandatory registration and a structured tax framework, enforcing compliance remains a challenge. Both legal entities and individuals are required to register with the Federal Tax Service and report monthly earnings via specialized online platforms, with over 1,000 entities registered as of May 2025. Corporate miners are taxed at rates of 25%, while individuals face a progressive tax scale of 13-22%. However, household miners using less than 6,000 kWh per month are currently exempt from registration.

The move towards legalization aims to combat rampant illegal mining operations that burden the power grid and undermine the tax base. Reports indicate that many miners resort to illicit practices to avoid high taxes and electricity costs, leading to significant annual budget losses in the billions of rubles as they manipulate energy meters and bribe utility workers.

Investigations Reveal Scale of Illegal Mining Activities

Authorities have recently intensified efforts to uncover illegal activities related to crypto mining. For instance, in St. Petersburg, officials confiscated over 2,700 mining devices from a facility that had been bypassing energy meters since 2018, which resulted in losses of nearly half a billion rubles to the electricity grid. In a separate case, a worker at the Omsk Thermal Power Plant was arrested for accepting bribes to facilitate energy theft, while investigators in Dagestan located extensive mining farms hidden within coolant tanks.

Image of Confiscated Mining Rigs

One employee from the electrical supply sector remarked, “The illegal crypto mining farm consumed more power than an entire five-story building.” Reports indicate that in Ingushetia alone, illegal miners caused an estimated loss of 35.4 million kWh, valued at over $4.3 million, during the first half of 2025. This accounted for an alarming 94% of the region's unaccounted energy consumption.

Energy companies are now deploying thermal-imaging drones and incentivizing staff to reveal underground mining operations, which have become more sophisticated with mobile units disguised as trucks and vans.

Regulatory Focus Driven by Economic Significance

The push for stricter regulation comes as the crypto mining industry gains notable economic importance in Russia. Kremlin officials like Maxim Oreshkin have suggested classifying mining as an export activity, with estimates indicating that Russia produces tens of thousands of Bitcoins each year, contributing around 1 billion rubles daily to the economy.

According to the Industrial Mining Association, Russia ranks second globally in crypto mining, representing over 16% of the world's total hashrate during peak summer months. Central Bank Governor Elvira Nabiullina has acknowledged that mining plays a crucial role in supporting the ruble, although assessing its overall impact remains difficult due to the prevalence of operations that thrive outside regulatory oversight.

The proposed criminal penalties illustrate Moscow's intent to capture tax revenues, protect the energy grid, and ensure the mining sector remains beneficial to the national economy and foreign exchange markets.