President Putin began his speech with the topic of regulation of cryptocurrencies. Said that he is aware of the discussions going on in this matter. The Central Bank of the country is looking after these issues. Certainly there are some advantages to cryptocurrency mining, he added. He meant the adequate availability of electricity in the country and the trend people who have become the masters of crypto mining. Putin’s statement suggests that he may consider keeping crypto mining running in the country, but before that he wants proper rules and management.
He directed the Central Bank of Russia to take a decision regarding the crypto space after discussions with members of the government. Said that the central bank does not stand in the way of our progress in technology. I would ask the Government of Russia and the Central Bank to come to an opinion. Putin’s soft stance on the crypto sector comes a week after Russia’s central bank called for a ban on all crypto-related activities.
The worldwide crypto market is facing a crisis due to the uncertainty surrounding cryptocurrencies in Russia. However, Russia’s official stand on the crypto sector is still awaited.
Significantly, in cryptocurrency mining, difficult algorithms have to be solved on advanced computers. This process consumes a lot of electricity, as those advanced computing machines have to be plugged in at all times. In Russia, electricity costs $0.06 (approximately Rs. 5) per kilowatt-hour for domestic use and $0.08 (about Rs.6) for business.
In comparison, in France, electricity costs $0.2 (about Rs 15) for domestic use and $0.14 per kWh for business. Due to the cheap electricity prices in Russia, crypto mining has gained momentum in the country. Due to this some areas are facing power shortage.
People in the Irkutsk region of eastern Russia have built illegal crypto mining centers in their homes, garages and even balconies. This is called ‘gray mining’. According to the Irkutsk Electric Grid Company (IESC), there has been a 108 percent increase in electricity consumption in the region last year. The local administration has uncovered 1100 cases of gray mining by raiding the area.
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