The process of mining cryptocurrencies takes a lot of energy for the high-powered computers to complete the algorithms associated with approving transactions through the blockchain.
Moving Public Crypto Mining, Private
These expenses are why there have been two electric power stations sold in Russia to private investors for the process of mining cryptocurrency. Both of these plants are located in the region of Perm, with one station on the western side of the Middle Ural Mountains and the other terminal located in the Republic of Udmurtia.
The plan is for these locations to be utilized to develop a center for data and the mining of cryptocurrency. It is believed that the investors purchased the stations for somewhere in the region of 160 million rubles which translates roughly into $3 million.
The buyer of these stations is said to be a businessman by the name of Aleksey Kolesnik who has had his role inee this purchase confirmed indirectly. Despite this move, the mining of cryptocurrency in Russia will only be allowed once the government has approved the appropriate legislation.
As of January 2018, there were no laws in Russia when it comes to digital money. The government has been in the process of debating what their stance will be when it comes to the regulation of cryptocurrencies, with progress on the issue expected to be revealed during 2018.
It was in December 2017 that Alexei Moiseev who is the Deputy Finance Minister in Russia suggested that there was a possibility that the mining of bitcoin and other digital currencies would be made illegal, but it would be legal to purchase or trade them.
Bitcoin as a Threat to National Currency
Russia has always been very protective of their fiat currency, and some within the government see digital currencies as a threat to the control they have over the financial system in their country.
As Russia is a nation that historically has had high levels of corruption in recent years, there are also concerns that cryptocurrencies will be used for illicit means such as bribery due to the security features of blockchain technology making it harder to trace these payments.
There are some supporters of digital currencies in Russia who propose that they would offer a great solution to the bypassing of Western sanctions and also the development of cryptocurrency mining areas being a lucrative source of revenue.
Many large cryptocurrency mining companies in China are currently looking to expand their operations overseas due to energy restrictions in their own country. This development could also be an excellent opportunity for the likes of Russia to capitalize on this trend.
Either way, President Vladimir Putin has given orders to his government that there needs to be legislation regarding cryptocurrencies as a whole proposed by July 2018.