Russian Legislators Endorse Cryptocurrency Tax Legislation: Miners to Face 13-15% Tax on Earnings

Russian legislators have endorsed the government’s cryptocurrency tax legislation, indicating that industrial Bitcoin miners will soon be required to pay taxes on their earnings.

The news outlet Komsomolskaya Pravda reported that the State Duma approved the proposed modifications to the Russian Tax Code during the bill’s second and third readings.

Crypto Tax Legislation: Will Putin Sign?

The bill is now set to proceed to the Russian Senate for ratification before it is signed into law by President Vladimir Putin.

Given the swift actions of the Duma, it is probable that both of these steps will be finalized in the upcoming days.

The legislation stipulates that crypto miners must pay a flat tax rate of 13% on their income if their annual earnings do not exceed 2.4 million rubles ($21,210) from their activities.

If their earnings surpass this threshold, they will be subject to a tax rate of 15%, according to the text of the bill.

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This legislation is also significant from a legal perspective, as it formally acknowledges cryptocurrency as a type of “property” for the first time.

Previously, Russian courts faced challenges with crypto-related cases, as judges were uncertain about how to categorize “public” blockchain-based tokens.

The bill also contains a provision stating that miners are exempt from paying value-added tax (VAT) when mining tokens and trading them on cryptocurrency exchanges.

However, it mandates that miners must report their activities to the Federal Tax Service (FTS).

Those who do not comply may face fines of up to 40 thousand rubles ($354), as outlined in the bill.

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Swift Implementation

Russia’s cryptocurrency mining regulations are being implemented rapidly since Putin enacted the country’s first crypto mining “legalization” law in August of this year.

This law took effect on November 1, and the government has since issued decrees temporarily prohibiting mining in areas experiencing energy shortages during the winter months.

The FTS recently announced that approximately 150 companies have already submitted applications for operating licenses.

The tax authority indicated that it anticipates more businesses will apply for permits in the near future.

A Russian crypto miner showcases his home mining setup. (Source: PC Boyarin/YouTube/Screenshot)

Increase in Mining Hardware Prices Due to Rising Demand

Earlier this week, Lenta reported a significant increase in the number of Russians purchasing crypto mining equipment in recent weeks.

The media outlet noted that “industry sources” indicated that “in the second and early third quarters of FY2024, Russians were acquiring only “about 30 rigs per week.”

However, in September, this number surged to 200. Since the beginning of November, miners have been acquiring a total of 600 rigs weekly.

The Moscow-based mining hardware company Mining Group stated that the “enthusiasm” of recent months has driven prices up “by 10%-15% percent.”

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Alexander Peresichan, the CEO of the software solutions provider Tehnobit, remarked that the “profitability of Bitcoin mining” remains robust in Russia. Peresichan stated:

“Following the Bitcoin halving event in the spring of 2024, the cost of mining in Russia increased to approximately $40,000. In the Irkutsk region, it is lower, around $35,000, if one is fortunate enough to find a free and profitable ‘connection.’ However, such opportunities are no longer available.”

Irkutsk is recognized as Russia’s Bitcoin mining hub. Nonetheless, it has also become a center for illegal mining, which energy companies claim is adversely affecting the broader Siberian power grid.

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