Russia is poised to significantly intensify its crackdown on unregistered cryptocurrency mining, proposing a range of severe criminal penalties including forced labor and substantial prison sentences. This legislative push comes little more than a year after the country formally legalized the cryptocurrency mining industry, highlighting a growing frustration with widespread non-compliance among operators.

The Ministry of Justice recently published draft amendments to the Criminal Code, which aim to reclassify many forms of illegal crypto mining from an administrative offense to a far more serious criminal one. This move is a direct response to the prevalent disregard for the regulatory framework that was established in 2024, following President Vladimir Putin’s signing of mining legislation last summer. Despite the initial intention to bring the rapidly expanding sector into the legal light, authorities report that the majority of operators continue to evade official registration and tax obligations. Deputy Finance Minister Ivan Chebeskov noted in June that only approximately 30% of miners had registered with the Federal Tax Service, leaving a vast number of operations in what officials term a "gray zone."

Under the provisions of the proposed law, individuals found mining cryptocurrency without proper registration could face stringent financial penalties, specifically fines ranging from 500,000 to 1.5 million rubles. Beyond monetary sanctions, the draft also introduces the possibility of up to two years of forced labor. For less severe infractions, courts would retain the discretion to impose up to 480 hours of compulsory labor.

Even harsher penalties are stipulated for large-scale or organized mining operations. Activities that generate "significant" or "especially large" income, or those involving coordinated groups, could result in fines reaching up to 2.5 million rubles. Furthermore, such offenses could lead to forced labor for a period of up to five years or prison sentences of similar duration. The confiscation of mining equipment and additional financial penalties would also remain viable punitive measures.

Russia's existing regulatory framework for cryptocurrency mining distinguishes between small-scale and commercial operations. Individuals who consume less than 6,000 kilowatt-hours of electricity per month are categorized as private persons. These private miners are permitted to operate without entering a special register, though they are still obligated to pay personal income tax on any mined cryptocurrency. In contrast, larger commercial miners and infrastructure operators are legally required to register in Russia, submit monthly production reports, and adhere to specific regional restrictions.

However, authorities have consistently found enforcement of these regulations to be challenging. Illegal mining operations frequently contribute to electricity theft or operate in restricted regions, placing significant strain on local power grids. Numerous regions across Russia have reported power outages directly attributable to unregistered mining activities, which has, in turn, prompted temporary bans during periods of peak winter demand. Officials conservatively estimate that illegal operations collectively consume billions of kilowatt-hours annually. Prior attempts to curb this activity, including fines of up to 2 million rubles and equipment seizures, have largely failed to produce the desired effect. Law enforcement has responded with measures such as the arrests of utility employees accused of facilitating illegal mining and the shutdown of large-scale mining farms. The draft amendments, published on December 30, are currently open for public consultation, allowing for feedback on these proposed changes to Russia’s stance on cryptocurrency mining.