Russia is preparing to escalate its crackdown on unregistered cryptocurrency mining, proposing criminal sanctions that include forced labor and prison terms, little more than a year after formally legalizing the industry.
The Ministry of Justice on Monday published draft amendments to the Criminal Code that will reclassify many forms of illegal cryptomining from an administrative offense to a criminal one.
The proposal comes amid widespread non-compliance with the regulatory framework that came into effect in 2024, following President Vladimir Putin’s signing of the mining law 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 taxation. Deputy Finance Minister Ivan Chebeskov said in June that only about 30% of miners had registered with the Federal Tax Service, leaving the majority in what officials describe as a “grey zone”.
Harsh penalties for illegal mining in Russia
According to the draft law, people who mine cryptocurrency without proper registration could be fined between 500,000 and 1.5 million rubles or up to two years of forced labor. Courts will also be allowed to impose up to 480 hours of forced labor in less serious cases.
Harsher penalties are reserved for large or organized operations. Mining that generates “significant” or “particularly large” revenues, or that involves coordinated groups, can result in fines of up to 2.5 million rubles, forced labor for up to five years, or prison terms of equivalent length.
Confiscation of equipment and additional financial penalties will remain possible.
Russia’s current framework distinguishes between small-scale and commercial miners. Individuals who consume less than 6,000 kilowatt-hours of electricity per month are classified as private individuals and may mine without entering the special register, although they must pay personal income tax on mined cryptocurrency.
Major commercial miners and infrastructure operators are required to register in Russia, submit monthly production reports and comply with regional restrictions.
Authorities say enforcement has proven difficult. Illegal mining, often associated with electricity theft or activity in restricted areas, has continued to strain local power grids.
Regions in Russia have reported outages related to unregistered mining, leading to temporary bans during periods of high winter demand. Officials estimate that illegal operations consume billions of kilowatt-hours annually.
Previous measures, including fines of up to 2 million rubles and equipment seizures, have failed to curb the activity. Law enforcement actions have included arrests of utility employees accused of facilitating illegal mining and the closure of large farms.
The amendments were published on 30 December and are open to public consultation.