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Russian authorities will permit cryptocurrency mining and tax miners

The Ministry of Telecom and Mass Communications of the Russian Federation is going to permit individual and corporate cryptocurrency mining, though keeping this process under control.

According to “Vedomosti”, the Ministry is now working on the specialized system that will detect miners through analyzing internet traffic and individual patterns of energy consumption (energy consumption rate of mining farms tends to be round-a-clock stable). The system will allegedly match the capacity of miner’s mining equipment against the cryptocurrency amounts a miner declares at the cryptocurrency stock exchange. There will be special electricity quotas and tariffs for miners.

At first, a two-year-long tax break will be granted to miners. However, it will not exempt them from mandatory book-keeping. After this “tax holidays” period elapses, the legal entities involved in cryptocurrency mining will be liable for paying the Profit Tax, though exempt from VAT. The Profit Tax rate is not yet specified.

The conception is still under development now. It will be finalized and submitted to the Government before February 1, 2018.

Meanwhile, the Federal Ministry of Justice is aware of the issue, but has not yet forged its position on it. According to the source in the Ministry, the Office is ready to look into the matter when provided with related documents and legal acts.

At the same time, many experts doubt the practical feasibility of the emerging system as a whole.

For instance, Dmitri Marinichev, the owner of Radius Group (data centers) company, believes that cryptocurrency mining farms cannot be easily detected. Miners can “evade” the monitoring bodies by distributing energy consumption, internet traffic cyphering, moving to regions with high energy consumption rates, as well as by numerous other means. If the Russian laws become too harsh on miners, they will move to Belorussia, despite low electricity tariffs, Marinichev believes.

Thanks to the Decree “On Digital Economy Development”, the Belorussian citizens are free to mine, exchange, purchase and sell cryptocurrency without any limitations or licensing. Even more of that, the cryptocurrency miners from Belorussia can conduct transactions worldwide, whereas cryptocurrency mining itself is tax-free till 2023.