Russia’s cryptocurrency mining energy consumption fell in 2022

According to a report by the Analytical Centre for the Fuel and Energy Complex (ACTEK), as cited by ТАСС, energy consumption by cryptocurrency miners in Russia fell 49% in 2022 to under 5 billion kWh.

According to experts, the global annual figure is around 100-110 billion kWh.

The share of mining in Russia’s energy consumption stands at about 2.5-3%, with official estimates below 1%.

According to ACTEK’s report, domestic cryptocurrency mining poses an acute problem for regions with low electricity tariffs — Irkutsk Oblast, Krasnoyarsk Krai and the North Caucasus Federal District.

In particular, in Irkutsk Oblast, electricity consumption in 2021 exceeded 2020 levels by more than 50%.

This led to heavier loads on power grids and, as a result, equipment failures, as well as aggravating the cross-subsidisation problem in the energy sector. Moreover, guaranteed suppliers were forced to purchase electricity at unregulated prices to cover unplanned demand from households.

To address the problem ACTEK proposes transparent regulation of commercial cryptocurrency mining to legitimise it, and differentiated tariffs for households based on consumption levels.

Independent experts add that tax incentives could help miners emerge from the shadows, given the difficulty of equipment procurement amid chipmakers leaving Russia.

According to calculations by the BitRiver data-centre operator, Russia in the first quarter of 2023 for the first time ranked second in the world by mining capacity deployed — 1 GW.

Meanwhile, the Finance Ministry assessed annual cryptocurrency mining in the country at about $4 billion. Potentially the industry could contribute around 20 million rubles a year to the state treasury, according to the ministry.

The industry regulation bill was registered in the State Duma of the Russian Federation since mid-November 2022. It obliges individuals and legal entities to report to the tax service on mined cryptocurrencies, indicating the address to which they are credited. Its adoption is expected in 2024.