Russia counts up to $120 million annually in missed crypto mining tax revenue

Russia’s state budget is losing a colossal sum of money in terms of uncollected taxes from illegal crypto mining operations in the country.

The government in Moscow has been trying to bring the whole business out of the shadows, but despite legalizing it last year, less than a third of Russian miners are registered with the federal tax authority.

Russian state misses 10 billion rubles in tax revenue from mining

Russia is failing to collect a massive amount of money as a result of tax evasion and unauthorized activities in the cryptocurrency mining sector, according to an observer of the field.

Speaking to Russian media, Pyotr Fyodorov, associate professor at the National Research University of Electronic Technology (MIET), estimated:

“Around 10 billion rubles a year (more than $122 million) are lost in taxes in Russia due to illegal mining.”

Most of the underground crypto farms can be found in two regions with high concentrations of mining operations, the Siberian Irkutsk Oblast and the Republic of Dagestan in the North Caucasus.

They are often built at abandoned industrial or agricultural sites in rural areas that still have access to the power grid, Fyodorov elaborated further in an interview with the 78 TV channel.

The engineer emphasized that these facilities can be identified by the significant spikes in electricity overconsumption or frequent breakdowns of the distribution network in the area.

Majority of Russian crypto miners evade taxation

Crypto mining is one of the few, if not the only, properly regulated crypto-related activities in Russia, which recognized it as a legitimate business in 2024 in order to tap into its profits and exploit the vast country’s competitive advantages in terms of cheap energy and cool climate.

To legally engage in mining, both companies and individual entrepreneurs are required to register with the Federal Tax Service (FNS) and pay their dues to the state. Home miners are exempted from this obligation as long as they use less than 6,000 kWh of electricity monthly.

Energy shortages, caused by the mining boom in parts of the country such as the two regions mentioned by Fyodorov, have been more or less addressed with local, seasonal or permanent restrictions.

While the Ministry of Energy recently indicated it sees no reason to expand existing regional bans on cryptocurrency mining, tax evasion in the sector remains a challenge for Russian authorities on the federal level.

Speaking at the “Digital Finance: New Economic Reality” forum recently, Russia’s Deputy Minister of Finance Ivan Chebeskov revealed that only around 30% of participants in coin mining activities have so far registered with the FNS, and the government is preparing to increase that figure.

One of the proposed measures, discussed with the Federal Customs Service, is an amnesty for imported mining equipment that has not been duly registered.

Another is a new draft law introducing harsher penalties for illegal crypto miners, something that the country’s power grid operator Rosseti has called for as well.

The finance ministry official also stressed the need for Russia to develop its own infrastructure for mining and everything else related to cryptocurrencies. Quoted by the Bits.media crypto news outlet, Chebeskov explained:

“A full-fledged infrastructure is necessary to work with virtual assets. By full-fledged, we mean clear rules of the game, including the ability to convert cryptocurrency into fiat, and more active use of crypto for settlements and investment purposes.”

“We are gradually moving towards this goal,” remarked the deputy head of the Russian Treasury, noting that his department is already working with the Central Bank of Russia to develop the domestic crypto infrastructure within the “experimental legal regime” for crypto operations established in the country.