Monday, December 6

Russia plans to legalize cryptocurrency mining

Russian parliamentarians are planning to legalize cryptocurrency mining activity, recognizing miners as entrepreneurs. In other words, they are trying to tax this industry that still doesn’t pay taxes.

The proposal was presented this Thursday (11) by the vice chairman of the Security Commission, Andrey Lugovoi, and although the Central Bank of Russia is not signaling support, the president of the Duma, Viacheslav Volodin, is wanting to create a group to deal with the issue.

Today the mining activity is at its peak, with several companies listed on stock exchanges in several countries such as the USA and Canada. Russia, currently the third-largest bitcoin miner, now intends to seize the moment to earn revenue for its country as well.

As easy as collecting money from the ground

Currently, the mining sector is experiencing its best moment, according to data from The Block, Bitcoin miners are returning around 324 million reais a day. The same can be seen in the mining of other currencies like Ethereum, which in October had revenues of 10 billion dollars.

Mining revenue. BTC, daily averaging 7 days. ETH, monthly. Source: The Block

After the expulsion of the miners from China, several of them sought out neighboring countries to continue exercising their activity. Although the US and Kazakhstan represent the biggest destinations, Russia is close behind, having doubled activity in the country.

With that, Russia is now looking for solutions to legalize the profession and, obviously, to earn money from it in the form of revenue. Since Russia holds 11% of the Bitcoin hashrate (according to data from August), this means that miners are mining 1 billion reais a month in Russia.

Now it is enough for the Russian government to approve the proposal to collect part of this money, which is as easy as collecting money from the ground to increase state funds.

Lack of clarity still worries

Twelve years after the creation of Bitcoin and six years of Ethereum, few countries are clear about how miners, professional or homegrown, should report their earnings. Causing confusion, especially for those who mined these coins before their prices rose.

The Russian parliamentarians’ proposal will make life easier for people whose mining is their main, or additional, source of income. This way, miners will be able to declare their earnings and use it in the local economy without any major worries.

Also, this could be another go-ahead for cryptocurrencies. It is worth remembering that Russia’s stance is still halfway in relation to the attitudes of China and the US, in which the activity was banned in the first and has been embraced in the second.

Finally, Bitcoin does not depend on the State, it is the State that depends on Bitcoin. Legalizing mining is just one more way for countries to seize assets from their citizens, as they do not create any wealth.

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