Russia's Capital Bans Bitcoin Mining: What It Means for the Global Hashrate

In a significant regulatory move, Russia has banned cryptocurrency mining in Moscow, the surrounding Moscow Region, and parts of Kursk, effective until December 31, 2032. The government decree No. 936, signed on July 25 and published on July 31, also prohibits participation in crypto mining pools in these areas.

This decision comes as Russia's Energy Ministry seeks to mitigate power-capacity shortages caused by energy-intensive mining facilities straining regional grids. Currently, mining consumes approximately 1 gigawatt in the Moscow power system, and data-center capacity could reach 3.6 GW, or 17% of peak demand, by 2032.

Russia's Role in Global Bitcoin Mining

Russia is the world's second-largest Bitcoin mining power, accounting for an estimated 175 exahashes per second, or 16.4% of Bitcoin's global computing power in Q1, according to Luxor's Hashrate Index. The U.S. leads with a larger share, but Russia's position is significant.

The ban in Moscow and surrounding areas raises questions about the impact on Russia's overall hashrate, though it's unclear how much capacity is located in the newly restricted regions.

Mining, Sanctions, and Crypto Payments

Russia's mining industry is intertwined with its response to Western sanctions. Russian companies have been using domestically mined bitcoin for international payments, as legal changes in December 2024 allowed this to counter sanctions. The U.S. Treasury sanctioned BitRiver and its subsidiaries in 2022, alleging that Russian mining helped monetize energy resources and offset sanctions' impact.

Despite the ban in certain regions, Russia's parliament passed legislation in July maintaining the ban on domestic crypto payments but preserving exceptions for foreign-trade settlements and mined cryptocurrency transactions.

Broader Regulatory Context

Russia legalized registered crypto mining in 2024, but has since imposed restrictions in multiple regions citing electricity demand. Earlier bans covered 10 regions through March 2031, with year-round restrictions later extended to southern Irkutsk, most of Buryatia, and Zabaykalsky Krai.

This latest ban in Moscow marks a significant tightening, reflecting the tension between fostering a crypto mining industry and managing energy resources.

What's Next?

The ban could push miners to relocate to other regions or countries, potentially impacting Russia's hashrate and global mining distribution. It also highlights the complex interplay between energy policy, sanctions, and cryptocurrency adoption.