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Russian authorities are exploring new ways to tax cryptocurrency mining. Osman Kabaloev, deputy director of the Finance Ministry's Financial Policy Department, revealed that the Finance Ministry is considering the introduction of an excise tax on electricity used for mining. Alternatively, a general tax regime, such as a profit tax, is also being discussed. 
In the excise tax scenario, miners would pay a fee based on the amount of electricity consumed per kilowatt-hour (kWh). Oleg Ogienko, <a href="https://ultramining.com/news/rossiya-sravnyalas-s-ssha-po-tempam-rosta-majninga-kriptovalyut/">BitRiver</a>'s director for government relations, explained that the tax amount would be calculated by multiplying electricity usage by a chosen rate, according to <a href="https://iz.ru/1704823/2024-05-31/vlasti-obsuzhdaiut-vvedenie-aktciza-na-elektroenergiiu-dlia-maininga">Iz</a>. 
In the profit tax scenario, miners would pay a tax on their annual profits. This includes all mined cryptocurrency, with documented expenses deducted from the total income. Currently, the tax rate is 20%, but it is expected to increase to 25% next year. This change is part of broader adjustments in Russia's tax system. 
Market participants have expressed concerns about the proposed excise tax. Sergey Bezdelov, director of the Industrial Mining Association, argued that this tax does not account for fluctuations in cryptocurrency prices. If prices rise, the budget would lose potential revenue, while during downturns, miners could face bankruptcy. Moreover, this system could discourage investment in the industry and require costly separate accounting for electricity used for mining. 
Russia ranks second in global mining output. With balanced regulation, it could strengthen its position further. However, if the new laws are too restrictive, they might harm the industry. For instance, high taxes on electricity for mining in <a href="https://ultramining.com/news/en/global-bitcoin-mining-activity-soars-hashrate-hits-record-high/">Kazakhstan</a> caused a significant drop in the country's computing power from 13.2% to 1%. 
In contrast, the United States, <a href="https://ultramining.com/news/en/bitcoin-mining-reshaping-landscape-amid-global-interest-surge/">hosting</a> 35-40% of global computing power, benefits from flexible regulations. The US recently proposed a 30% excise tax on electricity for mining, citing environmental concerns. Nonetheless, Russia's proposed excise tax could drive the mining market into a grey zone, warned Olga Malyugina, CEO of Nibble Invest.

Russia Considers Excise Tax on Electricity for Crypto Mining

Ultramining_Eng

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