Key facts:
The Ministry of Economy proposes low tariffs for electricity consumption for mining.
The Central Bank of Russia reaffirmed its rejection against Bitcoin and the rest of the ecosystem.
The Russian Ministry of Economy considered allowing Bitcoin (BTC) mining in regions of that country where there is a constant surplus of electric power, as a sign of Vladimir Putin's government's acceptance of the activity that keeps the original cryptocurrency's protocol secure.
In statements to the local media Izvestia, Ministry spokespersons indicated that these proposed measures will help, they say, to stop "shadow mining" and, at the same time, introduce the cryptocurrency ecosystem into the legal field of the Eurasian country, even if that limits the production of digital currencies.
According to press information, the regulatory proposal received the support of the Ministry of Energy, but, in turn, found rejection by the Central Bank of Russia, which a few days ago spoke out against Bitcoin.
In addition to the proposal to mine in regions with surplus energy, they launched the initiative to introduce reduced commercial tariffs for electricity consumption for this activity.
According to the Ministry, mining "should be recognized as a commercial activity" and, therefore, "taxes should be introduced on the fact of converting cryptocurrencies into rubles, following the example of Japan and Germany."
Still, they advocate that the government should offer "acceptable prices" for Bitcoin miners, as that would "eliminate the risks of insufficient power supply to housing, social facilities and industries in other territories."
To achieve that, the Ministry proposes low tariffs for connecting mining farms and other data processing centers to energy sources. They seek to make prices not dependent on the place of production, "even if it is located at generation facilities."
In this way, both the connection of mining devices to electricity and the cost of kilowatt hours (KW/h) will become economical, according to the Russian Ministry of Economy.
It also wants to introduce a cost for the use of electricity for individual miners. Although it has not been determined, they explain that they should fully cover the needs of a household.
"If consumers start mining, their expenses will increase. This will become an indicator for setting a higher tariff, as far as industries are concerned," the ministry spokesman told the local newspaper.
Central Bank on the defensive again
Izvestia spoke with representatives of Russia's monetary body to get their impressions of the Ministry of Economy's proposals. For the institution, it is negative because if an "unproductive demand" for electricity is created, "mining will limit production in the country and endanger the supply of residential facilities and enterprises."
"Such activities will not bring benefits to the economy. Moreover, cryptocurrency mining is contrary to the goals of achieving carbon neutrality. The competitiveness of mining in Russia is not associated with the development of advanced technologies, but with cheap electricity, while software and hardware are imported."
Central Bank of Russia.
The institution's words add to what they expressed last January 20, when, in a report, they proposed to outlaw Bitcoin mining and other cryptocurrencies, claiming that these assets pose alleged threats to the "well-being of Russian citizens" and the stability of that country's financial system.
Volatility and its use in criminal operations (which is usually done mainly with fiat money) are part of the alleged threats that the Bank sees in Bitcoin and the rest of the ecosystem. This institution qualified cryptocurrencies as a "financial bubble" and as a market determined by a "speculative demand".
Shortly thereafter, the Hungarian Central Bank validated these statements, as reported in this media. They cited the same reasons as their Russian counterpart, but extrapolated the request for a ban throughout the European Union.
To no avail
The truth is that the Russian Bank's request was to no avail, as days later, President Vladimir Putin himself was open to Bitcoin mining, charging against that institution.
"The Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this area of activity," Putin said.
That scuttled the proposals and recommendations of the centralized Russian bank. At that point, Putin asked the ministers to continue the discussion on that issue and come to a unanimous decision.
So it was. On February 9 this newspaper reported that Russia was already preparing a draft law on the circulation of cryptocurrencies, which implied a radical change for the use of these assets, which would be legalized and regulated.
Although the plan, apparently, does not show any change regarding Bitcoin mining, it does plan to give explicit recognition to cryptocurrencies as currencies and not financial assets, so they will have to be governed by the legislation of that country that applies directly to fiat money.
The legislation is expected to come out on February 18 and, with it, the new direction that the Bitcoin ecosystem will take in that country, where almost 12% of the population is already a cryptocurrency user.
Russia, the new mining destination
What the Ministry of Economy proposes, added to what Putin said, makes that country, whose controls are absolute, gradually become a new destination for Bitcoin miners.
It is known that, since the political crisis in Kazakhstan, this Central Asian country, which once held 18% of the world's Bitcoin hashrate, has become hostile to the activity, through regulations, cuts and tariff taxes that have complicated the development of the industry.
Thus, the bitcoin producers that left China in the middle of last year, when that country made strong advances against miners, are increasingly decentralizing the activity, moving to other borders and locating a place where they can fully dedicate themselves to the extraction of cryptocurrencies.
Thanks for reading
Posted Using LeoFinance Beta
The Russian Central Bank is like legacy financiers everywhere, they don't understand or see the value of crypto.
But Putin is a canny operator. We use crypto to build towards an alternative where governments and banks can't just take our money on a whim. He's probably thinking along the same lines, of building up his crypto knowledge and reserves ready for the day the US tries to push Russia out of the SWIFT system.
There is logic to your comment colleague, Putin probably thinks in the way you describe.
Posted Using LeoFinance Beta
Source of potential plagiarism
Direct translation without giving credit to the original author is Plagiarism. Repeated plagiarism is considered fraud. Fraud is discouraged by the community and may result in the account being Blacklisted.
Guide: Why and How People Abuse and Plagiarise
Please note that direct translations including attribution or source with no original content are considered spam.
If you believe this comment is in error, please contact us in #appeals in Discord.
Congratulations @cryptoday24! You have completed the following achievement on the Hive blockchain and have been rewarded with new badge(s):
Your next target is to reach 50 upvotes.
Your next target is to reach 50 replies.
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPTo support your work, I also upvoted your post!
Check out the last post from @hivebuzz:
Support the HiveBuzz project. Vote for our proposal!