Russian Government Permits Regions to Raise Electricity Rates for Crypto Miners

Moscow’s federal government has given permission to regions for determining the local electricity tariffs for the people and this could end up having an impact on crypto mining at homes. The subsidized household electricity in the country is being used for mining cryptocurrencies in garages and basements at home. Thus, Russians who have been mining digital currencies at home can now expect to be charged higher electricity bills because of a reform that has permitted regional authorities to restrict the supply of energy at preferential rates. This move comes after a request from local utilities to implement thresholds for the amount of subsidized electricity given to the general population.

They had also complained about the increase in crypto mining activities in residential areas. The Russian media reported that private customers would have to pay higher for their consumption that exceeds this threshold. The new pricing schemes haven’t been adopted by most Russian regions as yet. Crimea is the only exception where cheap electricity is already restricted to 150 kWh a month. The Ministry of Energy and the Federal Antimonopoly Service have assured that the purpose of introducing the new policy is for discouraging the inappropriate consumption of energy and wouldn’t increase expenses for most people.

The state regulates the electricity tariffs applicable to households in Russia and they are kept lower than economically justified levels. The difference is compensated by power utilities by charging businesses higher rates. The data obtained from the energy markets regulator in Russia shows that companies will pay more than 240 billion rubles, which is around $3.3 billion in 2021 for financing ‘cross-subsidization’. The average consumption in the Russian Federation per household last year had been around 250 kWh. Now, more than 600 kWh per month is consumed by 40% of the homes that exist in apartment blocks. 

The amendments made recently to a federal government decree will offer other regions, along with Crimea, the chance to implement differentiated electricity tariffs. These changes were made after authorities in Irkutsk Oblast and power distributors had complained about the increasing number of crypto farms being established in residential buildings. Irkutsk has been dubbed as Russia’s crypto mining capital and electricity for households in the region only costs about 0.86 rubles ($0.01) per kWh. In comparison, the average tariff applicable in the rest of Russia is about 4.25 rubles ($0.06). Media reports had disclosed earlier in December that 85 lawsuits had been filed by a local power utility against at-home miners.

Crypto mining is one of the numerous crypto-related activities that don’t fall under the law ‘On Digital Financial Assets’, which had been implemented in Russia this year for partially regulating the crypto space. There has been increasing pressure on the Russian government to recognize crypto mining as a business activity and tax it accordingly. This would also permit utilities in charging miners more for the energy they consume for minting digital coins. A working group was recently set up at the State Duma and had its first meeting this week for discussing crypto mining regulations.