Russian Government Allows Regions to Raise Electricity Prices for Crypto Miners – Mining Bitcoin News

The federal government in Moscow has allowed regions to set local electricity tariffs for the population, a measure that will impact home crypto mining. Subsidized household electricity in Russia is often used to mint digital currencies in basements and garages.

Regions in Russia receive approval to increase the cost of home mining

Russians mining cryptocurrencies at home may face higher electricity bills due to a reform that allows regional authorities to limit the supply of electricity at preferential prices. The move comes after local utilities sought the authority to set thresholds for the amount of subsidized electricity available to the general population amid complaints about the prevalence of crypto mining in residential areas.

Private customers will have to pay more for consumption that exceeds these thresholds, the Russian business newspaper Kommersant reported. Most Russian regions have yet to introduce new pricing models, with the exception of Crimea, where cheap electricity is already capped at 150 kWh per month. The Federal Cartel Office and the Energy Ministry have assured that the new policy is aimed at curbing “inappropriate energy consumption” and should not increase spending for most consumers.

Household electricity tariffs in Russia are regulated by the state, which keeps them well below economically justified levels. Electricity suppliers make up the difference through higher tariffs for companies. In 2021, companies are expected to pay over 240 billion rubles (nearly $3.3 billion) to finance this "cross-subsidization," data from Russia's Energy Market Regulatory Authority shows.

According to an estimate by Kommersant, the average monthly consumption per household in the Russian Federation was around 250 kWh last year. Around 40% of apartments in apartment buildings now consume more than 600 kWh per month.

The latest change to a federal government decree will give all other regions besides annexed Crimea the opportunity to introduce differentiated electricity tariffs. The changes come after electricity distributors and authorities in Irkutsk Oblast complained about the rapidly growing number of residential crypto farms.

Electricity for households in Irkutsk, dubbed the crypto mining capital of Russia, costs just 0.86 rubles ($0.01) per kWh, while the average tariff across Russia is 4.25 rubles (nearly $0.06). In early December, media reports revealed that a local energy supplier, Irkutskenergosbyt, filed 85 lawsuits this year against miners at home.

Mining is one of several crypto-related activities that remained outside the scope of the law “On Digital Financial Assets,” which partially regulated the Russian crypto space in January. There were calls among officials in Moscow recognize evaluate it as a business activity and tax it accordingly. This would also allow utilities to charge miners more for the energy they use to mint digital coins. A Working group set up at the State Duma recently held its first meeting to discuss regulations for mining and other sectors in the crypto industry.

Do you expect Russian regions to increase electricity prices for cryptocurrency miners? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy journalist from Eastern Europe who likes Hitchens' quote: "Being a writer is what I am, not what I do." In addition to crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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