Russia Targets Unregistered Crypto Miners with Prison Terms Up to Five Years

Russia’s Ministry of Justice has published draft amendments that would send unregistered cryptocurrency miners to prison for up to five years, marking a dramatic escalation in enforcement just over a year after the country legalized the industry.

New Criminal Code Article Introduces Harsh Penalties

The draft legislation introduces Article 171.6 to Russia’s Criminal Code, specifically targeting illegal digital currency mining and unauthorized mining infrastructure operations. According to reports from Interfax news agency, the Ministry of Justice published the proposals on December 30, 2025, through Russia’s Official Internet Portal of Legal Information.

The penalties follow a two-tier structure based on the scale of violations. Basic offenses that cause significant damage or generate income above 3.5 million rubles (approximately $35,000) could result in fines up to 1.5 million rubles, compulsory labor up to 480 hours, or forced labor up to two years.

For aggravated cases involving organized criminal groups or income exceeding 13.5 million rubles, the consequences become much more severe. Offenders could face fines ranging from 500,000 to 2.5 million rubles, forced labor for up to five years, or imprisonment for up to five years, with additional fines up to 400,000 rubles.

Source: gov.ru

Deputy Prime Minister Alexander Novak announced in early December 2025 that the government plans to introduce criminal liability for illegal mining in 2026, signaling Moscow’s determination to formalize the sector.

Massive Compliance Problem Since Legalization

Russia officially legalized cryptocurrency mining on November 1, 2024, requiring legal entities, individual entrepreneurs, and infrastructure operators to register with the Federal Tax Service. The law mandated monthly reporting of mined assets, though private individuals using under 6,000 kilowatt-hours per month remain exempt from registration.

Despite the legal framework, compliance has been extremely low. As of May 2025, only around 1,000 entities had registered with authorities. Deputy Finance Minister Ivan Chebeskov revealed that roughly 30% of miners had registered by mid-2025, leaving an estimated 140,000 to nearly 200,000 Bitcoin mining farms operating in the shadows across Russia.

The country emerged as the world’s second-largest crypto miner by 2023, with an estimated capacity of 1 gigawatt and production of around 54,000 Bitcoin annually worth billions of dollars. Mining operations concentrate heavily in energy-rich regions like Siberia and Irkutsk Oblast, where abundant energy resources and cool climates provide competitive advantages.

Electricity Theft Reaches Crisis Levels

The scale of illegal mining’s impact on Russia’s power grid has reached alarming proportions. In Ingushetia alone, illegal miners stole 35.4 million kilowatt-hours of electricity worth over $4.3 million during the first half of 2025, according to regional power distributor Rosseti North Caucasus. This theft represented 94% of all unaccounted electricity use in the republic.

Authorities have uncovered increasingly sophisticated illegal operations throughout the country. In St. Petersburg, officials seized more than 2,700 mining machines from a facility that had bypassed electricity meters since 2018, causing losses of approximately 500 million rubles. In Omsk, a thermal power plant employee was arrested after accepting a 500,000-ruble bribe to facilitate power theft for miners. Dagestan police discovered large-scale mining farms concealed inside industrial coolant tanks.

Energy companies have responded by deploying thermal-imaging drones to detect heat signatures from hidden mining operations and offering staff bonuses for discovering illegal sites. Some miners have adapted by operating mobile units housed in trucks and vans to evade detection.

The republic of Kabardino-Balkaria reported over 1 billion rubles in utility damages from electricity theft linked to hidden mining operations. Energy sector officials estimate annual budget losses reach billions of rubles as operators manipulate meters, bribe utility workers, and establish secret agreements with power companies.

Regional Bans Target Energy-Strapped Areas

Russia has implemented cryptocurrency mining bans in approximately 12 regions through March 2031 to prevent winter power shortages and grid instability. The banned areas include energy-strapped regions like Irkutsk Oblast, Krasnoyarsk, Buryatia, and several North Caucasus republics including Ingushetia and Dagestan.

The restrictions also extend to Russia-occupied Ukrainian territories and parts of the Far East. These seasonal and permanent bans aim to protect aging power infrastructure from the massive energy demands of industrial mining operations. In the village of Kiritsy near Moscow, consumer watchdog Rospotrebnadzor ordered mining firm Integral to halt operations for 30 days after residents complained about constant noise exceeding 50 decibels from gas-piston turbine generators, with locals reporting headaches and hearing problems.

Geopolitical Context and Strategic Importance

Russia’s push to formalize crypto mining comes as the country increasingly uses Bitcoin for international trade to circumvent Western sanctions. Finance Minister Anton Siluanov announced in late December 2024 that Russian companies have started utilizing Bitcoin and other digital currencies to settle cross-border transactions with partners like China, India, and the UAE.

Between July 2024 and June 2025, Russia conducted $376.3 billion worth of cryptocurrency transactions, according to blockchain analytics firms. The government views crypto mining as an export-like activity that brings foreign currency into the economy, provided participants comply with tax and financial monitoring rules.

The current tax framework subjects corporate miners to a 25% tax rate while individuals face progressive rates of 13-22%. Under Russia’s property classification of cryptocurrencies, both mining activities and crypto sales are exempt from value-added tax, though income from mining is taxed at market value upon receipt.

The Path Forward: Enforcement or Exodus?

Industry observers warn the strict penalties could drive legitimate operations abroad or push more activity underground, potentially undermining Russia’s position as a global mining powerhouse. Critics argue that high taxes and aggressive enforcement may deter foreign investment and technological development in the sector.

However, government officials maintain that formalizing the industry is essential for protecting energy infrastructure, ensuring tax revenue, and preventing connections to organized crime. The proposals reflect Moscow’s determination to fully integrate cryptocurrency mining into the formal economy while addressing concerns about grid stability and national security.

The draft amendments are currently undergoing public review, with authorities targeting full implementation of criminal penalties in 2026. If enacted, the measures would represent one of the most aggressive enforcement frameworks targeting crypto mining globally, potentially reshaping how the industry operates in Russia and influencing regulatory approaches in other nations grappling with similar challenges.