Cryptocurrency Mining as Seen from the Energy Sector: Choosing between Regulation and Free Rein
KEY CONCLUSIONS
The development of mining means additional burden for regular consumers
“Mining in terms of capacity
already ranks second in the world, second only to the United States. <…>
It begins to influence the energy system, so the question arises as to how to
regulate this activity,” Alexander Volobuev, Editor of the Department “Industry
and Primary Industries”, Vedomosti Business Edition.
“New power supplies and
connections should not affect consumers. <…> We are facing a sudden
increase in energy consumption. <…> The natural increase in consumption,
which was supposed to happen in the Irkutsk region over four years, occurred in
one year. After that, we started limiting the connection of other consumers.
<…> We will build generation facilities in Siberia, where the deficit is
estimated at one thousand 225 megawatts. <…> But until 2029, we have come
up with an economic incentive – increased transmission tariff for a certain
group of consumers,” Pavel Snikkars, Deputy Minister of Energy of the Russian
Federation.
The development of energy-intensive sites contributes to the emergence
of a new type of consumer
“With the growth of energy
consumption in Irkutsk, we have witnessed the emergence of a fundamentally new
type of consumer. Firstly, it emerges almost instantly. <…> Secondly, it
has nothing to do with geography, it does not care about socio-economic
development programmes; it does not need mineral resources or labour resources.
This new type of consumer emerges at any point solely because it has cheap electricity.
So, the question is, what is a fair price for electricity for this new
consumer,” Andrey Katayev, Director for Energy Markets and External Relations,
System Operator of the United Power System.
“The consumer profile has
changed a lot. <…> For example, it is very quick to build electrolyzers
[technological equipment used in mining and manufacturing enterprises for the
production of certain types of gases, the production of aluminium and
magnesium, can be used for desalting, disinfection and sewage treatment. –
Ed.]. Ready-made modules can be shipped within a few months, installed and
deployed in a matter of weeks. <…> Vertical greenhouses are also built
quite quickly,” Igor Runets, Founder, General Director, BitRiver; Co-Founder,
Industrial Mining Association.
PROBLEMS
Lack of capabilities and technologies for a fast construction of mining
stations
“We don’t know how to build
stations quickly. The whole world does not know how to build stations quickly;
any stations,” Pavel Snikkars, Deputy Minister of Energy of the Russian
Federation.
“The inability to build
stations is the reality in which we live,” Igor Runets, Founder, General
Director, BitRiver; Co-Founder, Industrial Mining Association.
Development of illegal mining in regions with subsidized tariffs
“We are talking about legal
mining, but there is also illegal mining. Let me remind you that the price [of
electricity. – Ed.] for the population is subsidized. And some people have an
irresistible desire to take advantage of this and extract personal profit from
the subsidized prices of electricity. There is <…> Abkhazia, where
electricity is supplied by the Russian Federation, it is subsidized, not paid
for, and mining there is growing at an explosive pace. In the republics of the
North Caucasus, where all consumption is fully subsidized, from households to
industry, we also see an explosive growth in mining,” Maxim Bystrov, Chairman
of the Board, NP Market Council.
“Mining is not defined, it has
no regulatory description, although there is a concept of digital assets,”
Pavel Snikkars, Deputy Minister of Energy of the Russian Federation.
“Illegal mining exists in the
Irkutsk region. <…> Today, the supplier of last resort has all the legal
and technical capabilities to fight this. <…> When they identify such
objects, they charge them additionally at the commercial price for electricity.
Today, an additional RUB 1 billion 300 million have already been accrued for
such consumption, 30% of this amount has been collected,” Konstantin Zaycev,
Chairman of the Irkutsk Region Government.
SOLUTIONS
Limiting access to cheap electricity for a certain group of consumers
“We will cancel and introduce
discriminatory access to this type consumers [illegal miners. – Ed.] in some
territories. The project is already being developed. It will be subject to
criticism, but we don’t know how else to react,” Pavel Snikkars, Deputy
Minister of Energy of the Russian Federation.
“We need not only quick
solutions, but also a long-term vision of how we will take into account such
consumers in the future,” Andrey Katayev, Director for Energy Markets and
External Relations, System Operator of the United Power System.
“I think that the ideology of
cryptocurrency is that it should be impossible to regulate and impossible to
tax,” Maxim Bystrov, Chairman of the Board, NP Market Council.
Legalization of mining, creation of a special taxation mechanism and
conditions for linking them to the region
“[It is necessary to give
miners an opportunity. – Ed.] to buy equipment and operate legally. In addition
to rapid consumption, legal mining has another benefit – miners can participate
in demand management,” Timofey Semenov, General Director, Intelion Mine.
“It is possible to introduce
some kind of differentiated tax that would be tied to the value of the
cryptocurrency basket. <…> We must link mining to a location. <...>
And this can be done with investments: if <...> you invested a couple of
billion roubles in mining [in the region. – Ed.], you won’t leave. <…>
Why can’t we incentivize mining with a reduced tariff? <…> Provide a
subsidy for relocation of existing mining stations to regions with a stable
surplus,” Valery Seleznev, First Deputy Chairman of the Committee on Energy of
the State Duma of the Federal Assembly of the Russian Federation.
For more information, visit
the Roscongress Foundation’s Information and Analytical System at roscongress.org/en.
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