Government task force blocks crypto mining in multiple regions amid economic crisis: 'Uncontrolled'

In an effort to reduce energy consumption and stop an economic crisis, a Russian government task force made a bold decision.

As explained by Bloomberg last month, the commission on the power industry approved a blanket ban on cryptocurrency mining in more than a dozen regions. The ban, which went into effect on Dec. 1 and runs through 2031, affects six regions in the Caucasus plus some of the territories occupied by the Kremlin's forces in Ukraine. There are also plans for a six-year ban in three southeastern Siberian areas near Lake Baikal during peak winter periods that lead to spikes in power consumption.

Per Bloomberg, Russia's Ministry of Energy determined that crypto miners consume a whopping 16 billion kilowatt-hours per year or nearly 1.5% of the nation's total electricity use. Some of the country's biggest crypto miners reside in the areas facing the restrictions, as they previously took advantage of cheaper electricity and easier access to the grid. Crypto mining has grown in popularity in Russia over the past few years due in large part to a major bump in the price of bitcoin and China's blanket ban on the practice in 2021.

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Unfortunately, crypto mining's rise in popularity in Russia has also caused a 1.4% increase in the nation's power consumption over the last year, and the Russian Power System Operator determined that figure is expected to grow by an average of 2.4% annually between 2025 and 2027. These numbers are particularly unsettling after a series of heat waves in Russia's southern and Caucasus areas this past summer led to blackouts that affected 2.5 million people, exposing the fragility of the nation's power grid.

Amid the grim outlook, Bloomberg reported that multiple Russian officials have voiced concerns over "uncontrolled growth" in electricity demand from crypto mining hubs, including President Vladimir Putin himself.

Cryptocurrency mining involves generating transaction codes to validate and approve transactions, which are largely produced by computer banks running continuously in massive, highly air-conditioned or liquid-cooled facilities that significantly impact the environment. A United Nations study found that during a previous mining period, bitcoin alone used 173.42 terawatt-hours of electricity, a similar amount of electricity consumption in some major countries.

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Despite Russia's new ban, some are wondering if the consequences of cryptocurrency mining are unavoidable.

"Russia is facing power shortages over the next five to 10 years," Ani Aslanyan, an analyst who runs a Telegram channel about cryptocurrencies, told Bloomberg. "The question is, does it makes sense to build new electricity capacity specifically for crypto miners?"

Aslanyan added that the Russian government has further to go in order to make a real impact in cutting back on energy usage, noting: "They aren't banning crypto mining outright, but rather creating conditions under which it becomes less attractive."