Bank of Russia flags risks from legalising crypto mining

Crypto mining poses significant threats to the Russian economy and its citizens, and the regulator believes it should be banned nationwide. Reports by TASS.

In the Bank of Russia’s view, mining creates demand for infrastructure to carry out cryptocurrency transactions, which amplifies the negative effects of the spread of this asset class and creates incentives to evade regulation.

“We consider it advisable to ban mining in Russia. It should also be stressed that blockchain should not be equated with mining; mining is not needed for all cryptocurrencies,” said the central bank.

Overloading power grids due to mining can lead to outages and jeopardise the energy supply of other infrastructure, while rising energy consumption may hinder the development of other sectors of the economy.

“The competitiveness of mining in Russia is not linked to using high technologies, but to cheap electricity,” the regulator noted.

Also, the Bank noted negative ecological effects, citing data on emissions from Bitcoin and Ethereum mining in 2021, which exceeded 78 million metric tonnes of CO2, equivalent to emissions from 15.5 million cars.

“Energy-intensive crypto mining runs counter to the carbon-neutrality goals of developed countries. It is possible that this protocol will be banned over time. If there is a mass shift away from energy-intensive mining, those engaged in the activity will incur losses,” the Bank’s press service noted.

In January, the Bank of Russia called for a full ban on the circulation and mining of cryptocurrencies in the country. In the State Duma, critics of the regulator’s hard line urged studying the possibility of creating farms in regions with surplus electricity. In recent days, the presidential administration opposed support for this initiative from Vladimir Putin.

The debate on banning mining of Bitcoin and other Proof-of-Work cryptocurrencies is taking place in Sweden and other European Union countries.

For details on why the problem of the environmental impact of crypto mining is greatly exaggerated, read ForkLog’s special material.

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