Russia is preparing to intensify its crackdown on unregistered cryptocurrency mining, proposing criminal penalties including hard labor and prison terms, just over a year after formally legalizing the industry.
The Ministry of Justice on Monday published a draft amendment to the Penal Code that would reclassify many forms of illegal crypto mining from administrative offense to criminal offense.
The proposal comes amid widespread non-compliance with the regulatory framework that came into effect in 2024, following President Vladimir Putin’s signing of mining legislation last summer.
Although mining was legalized to bring the fast-growing sector out of the shadows, authorities say most operators continue to avoid registration and taxes. Deputy Finance Minister Ivan Chebeskov said in June that only about 30% of miners had registered with the Federal Tax Service, leaving most operating in what officials describe as a “gray zone.”
Harsh penalties for illegal mining in Russia
Under the bill, people who mine cryptocurrency without proper registration could face fines ranging from 500,000 to 1.5 million rubles, or up to two years of forced labor. Courts would also be allowed to impose up to 480 hours of compulsory work in less serious cases.
More severe penalties are reserved for organized or large-scale operations. Mining that generates “significant” or “particularly large” income, or that involves coordinated groups, could result in fines of up to 2.5 million rubles, hard labor for up to five years, or prison sentences of similar length.
Confiscation of equipment and additional financial penalties would still be possible.
Russia’s current framework distinguishes between commercial and small-scale miners. People who consume less than 6,000 kilowatt-hours of electricity per month are classified as private persons and can mine without registering in the special registry, although they must pay personal income tax on the mined cryptocurrencies.
Commercial miners and larger infrastructure operators must register in Russia, submit monthly production reports and comply with regional restrictions.
Authorities say law enforcement has proven difficult. Illegal mining operations, often linked to electricity theft or activities in restricted regions, have continued to strain local power grids.
Some regions in Russia have reported outages related to unregistered mining, leading to temporary bans during peak winter demand periods. Authorities estimate that illegal operations consume billions of kilowatt-hours annually.
Previous measures, including fines of up to 2 million rubles and seizures of equipment, have failed to curb the activity. Police actions have included arrests of utility employees accused of facilitating illegal mining and large-scale farm closures.
The draft amendments were published on December 30 and are open to public consultation.
