Regulation
Putin Warns of Blackouts Due to ‘Uncontrolled’ Cryptocurrency Mining
President Vladimir Putin warned Wednesday that unregulated cryptocurrency mining risks overloading Russia’s power grid and causing large-scale power outages.
“An uncontrolled increase in electricity consumption for cryptocurrency mining may lead to energy shortages in some regions,” Putin told senior government officials at a meeting focused on the economy.
The Russian Ministry of Energy estimates that cryptocurrency mining consumes an average of 16 billion kilowatt hours per year, or nearly 1.5 percent of Russia’s total electricity consumption.
“The figure continues to rise,” Putin said, listing Russia’s relatively low cost of electricity and access to equipment as some of the factors driving the rise in cryptocurrency mining.
Despite its restrictive cryptocurrency laws, Russia was the first in the world the second largest Cryptocurrency mining country after the United States in 2023. Previous leaders, China and Kazakhstan, have restricted cryptocurrency mining activities in recent years.
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Investigative journalists recently named the North Caucasus republic of Dagestan, which was hit by long blackouts largely due to aging infrastructure, such as the “capital” of cryptocurrency mining in Russia.
On Wednesday, Putin shared the concerns regional authorities said the mines could cause “new commercial activities, residential areas and social facilities with supply disruptions and put promising investment and infrastructure projects on hold.”
The Kremlin leader said he had ordered tax and tariff regulations for miners and called for a federal law to address the issue, which appears to have taken on renewed importance in the midst widespread power outages in southern Russia on Tuesday.
In 2020, Putin signed a law that legalized cryptocurrencies as digital financial assets, but banned their use to pay for goods and services. Russia established blockchain-based “digital ruble” as new form of legal tender in 2023.
Last week, Russian lawmakers moved to legalize crypto mining, while simultaneously banning the circulation of cryptocurrencies in Russia.
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