Russia Cracks Down: Illegal Crypto Mining Now a Criminal Offense

Russia is drawing a hard line in the digital sand. The nation's latest legislative push aims to criminalize unauthorized cryptocurrency mining, signaling a major shift from regulatory grey area to strict enforcement.

The Regulatory Hammer Drops

Forget warnings or fines—this move escalates the stakes to criminal prosecution. The proposed law targets operations that siphon state-subsidized energy or bypass official oversight, framing them not as entrepreneurial hustle but as economic sabotage. It's a clear attempt to corall the wild west of decentralized compute power back under the Kremlin's watch.

Energy Theft Meets the Digital Age

The core issue isn't innovation—it's infrastructure. Rogue mining farms, often hidden in industrial parks or residential basements, have strained Russia's power grids. By criminalizing these activities, authorities aren't just chasing crypto; they're protecting a national resource. It turns unregistered ASICs and GPUs into contraband overnight.

A Calculated Power Play

This isn't a ban on crypto. It's a consolidation. The move likely aims to funnel mining activity into state-sanctioned channels, potentially creating a controlled, taxable industry. Think of it less like prohibition and more like nationalization—bringing the mining hash rate under the flag. After all, why let citizens profit from cheap energy when the government can?

The Global Ripple Effect

Russia's stance sends a tremor through the mining world. As one of the globe's top jurisdictions for hash rate, its regulatory crackdown could redistribute mining power, affecting network security and profitability elsewhere. Other nations watching may see it as a blueprint for control—or a cautionary tale about stifling innovation.

For the crypto bulls, it's a familiar paradox: regulation brings legitimacy but kills the anarchic dream. The finance sector will nod approvingly at the 'rule of law,' while quietly missing the chaotic profits of the unregulated frontier—proving once again that bankers love stability, but they got into crypto for the volatility.

Moscow goes after miners minting outside Russian law

The executive power in Russia intends to impose criminal liability for illegal crypto mining as well as administrative liability for smaller violations of the legislation regulating the industry.

The plan was made public by Russian Deputy Prime Minister Alexander Novak, who also unveiled the federal government is preparing harsher penalties for those who offer illegal lending services.

Quoted by the RIA Novosti news agency on Monday, the high-ranking official reminded that Moscow now wants to comprehensively regulate the turnover of decentralized digital money in the country’s economy next year and elaborated:

“We will legally regulate the issue of digital currency circulation, and also establish administrative liability for violations of legislation on digital currency mining and criminal liability for illegal mining.”

“And we will tighten responsibility, up to and including criminal liability, for individuals illegally engaged in providing consumer loans,” Novak also said, speaking at a meeting of the Russian Federation’s Council for Strategic Development and National Projects.

The MOVE of the federal government follows Central Bank of Russia’s decision to oblige credit institutions to link bank accounts to personal tax numbers.

This is necessary for the proper functioning of the so-called “Antidrop” platform, which the regulator aims to launch in 2027, explained the CBR’s Deputy Governor Olga Polyakova, quoted by the business news outlet RBC.

The monetary authority wants to use the tax numbers to identify money mules, called “droppers” in Russian slang, who are exploited by fraudsters to launder illicit money.

Funds stolen from victims are often converted to and from cryptocurrency, using bank cards and accounts registered under the names of such persons.

Critics have long noticed that measures like that, including options to cap cash withdrawals at ATMs and block bank accounts in case of suspicious transactions, are not only targeting scammers, but also affecting crypto traders, particularly those participating in peer-to-peer exchange.

Russia stepping up crackdown on illegal crypto mining

Mining became Russia’s first regulated crypto activity with the adoption of dedicated legislation in 2024. The law allows legal entities, individual entrepreneurs as well as ordinary citizens to engage in what’s now a legitimate business activity.

The first two categories are required to register with the Federal Tax Service (FNS) while the latter are free two mint digital coins without registration, as long as their electricity consumption remains under 6,000 kWh a month.

However, less than a third of all mining enterprises have so far registered with the state, according to a recent estimate. And both licensed and unauthorized miners have been blamed for causing electricity shortages in places with high concentration of crypto farms.

Local and federal authorities have temporarily or permanently banned the business in about a dozen regions, but Russians have kept mining, often on stolen power, defying the stringent restrictions, as recently reported by Cryptopolitan.

That’s despite an intensifying crackdown on such operations, with joint raids conducted by employees of utility companies and police officers, already actively backed by agents of the Federal Security Service (FSB).

Means employed in this struggle are becoming increasingly sophisticated. Investigators are now tracking energy consumption and internet traffic, with the help of smart electricity meters and Russian telecoms. They are even flying drones with thermal cameras to locate illegal crypto farms.

At the same time, miners are becoming more inventive, too. It’s not uncommon for law enforcement to now find mobile mining farms, with the hardware installed in the back of cargo vehicles, or mining machines placed in abandoned industrial and farm buildings that still provide access to the grid.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program