Crypto Mining Could Bring Russia $1B in Taxes, Report Suggests
Using its excess energy generating capacity to mine cryptocurrencies, Russia can increase its budget receipts by more than $1 billion dollars in annual tax revenue. The estimate comes from a report that also calls for the establishment of a Russian crypto valley.
Also read: Defying Crypto Winter, Swiss Crypto Valley Grows to 750 Companies
70 Billion Rubles Just From Taxes
Russia’s electrical surplus last year reached 20 GW. According to the study conducted by industrial mining solutions provider Bitcluster, that’s enough energy to power 14.8 million of the popular Antminer S9i ASIC devices. If Russia uses the excess electricity to mint digital coins, the state would receive 70 billion rubles (over $1 billion) just from VAT, the authors claim.
The report notes that a single Antminer S9i consumes approximately 1,350 kWt/h of electrical energy. There are currently around 740,000 units of this model in operation and their total consumption would be about 1 GW. With electricity in Russia priced at 2 rubles ($0.03) per kilowatt-hour, the VAT revenues from these machines would be around 292 million rubles (over $4.4 million) a month.
The researchers have also estimated that the establishment of a crypto valley for Russian miners would require an initial investment of only 1 billion rubles ($15 million), Bitnovosti reported. Bitcluster believes there are enough mining companies and entrepreneurs in Russia that are ready to invest in the development of such a project.
Crypto Business Parks Proposed
According to Bitcluster’s founder Sergei Arestov, the crypto valley could be situated around one of Russia’s numerous hydroelectric power plants. Mining facilities and the infrastructure needed to set up blockchain business parks can be built around the power station and take advantage of cheap and abundant energy supply.
Last year, the Russian Ministry of Finance had a similar idea: to establish territories with a special regulatory regime for companies from the crypto industry. Another proposal discussed by Russian institutions is to create offshore zones for blockchain businesses in Kaliningrad and Vladivostok, and a special economic zone in the Autonomous Republic of Crimea.
An idea to allow companies from certain industries to use cryptocurrencies in select Russian regions was included recently in a draft law prepared by the Ministry of Economic Development. It’s supported by Anatoly Aksakov, chairman of the important Financial Markets Committee of the Duma, the lower house of parliament.
Russian officials have previously indicated their readiness to support the legalization of crypto mining as a business activity. A package of draft laws aimed at regulating the crypto sector was introduced last spring and three bills were voted on first reading. Their second reading is scheduled to take place during the current session of the Russian parliament. However, the texts underwent significant revision and key terms such as cryptocurrency and mining were dropped.
Do you expect Russia will set up its own crypto valley? Share your thoughts on the subject in the comments section below.
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