Russia would ban miners from receiving rewards in bitcoins and cryptocurrencies

[Burgalin_LLC]

A month after Russia's President Vladimir Putin gave the go-ahead to the Digital Financial Assets (DFA) law, a potential reform is now looming that would legalize Bitcoin mining, but ban the incentives miners receive for your activity.

The Ministry of Finance proposed a set of amendments to the law that would prohibit all cryptocurrency transactions, limiting their use to three areas: inheritance, bankruptcy-related operations, and court executions.

Local media pointed out that the intention of the reform is to legalize Bitcoin mining, however, miners could not receive the remuneration as they would risk being fined up to 100,000 rubles ($ 1,300) and be sentenced to seven years in prison. . In the case of legal persons, the fine would amount to 1 million rubles ($ 13,000).

Dmitry Sakharov, CEO of the Moscow Digital School, commented that the situation is complex and it is unclear how miners would receive the incentives. "Experts may try to come up with some interesting legal structures, but all of them will carry significant risks of applying administrative (fines) and criminal (imprisonment) liability."

The intention to modify the recently approved law is contradictory since cryptocurrency mining is sustained precisely by the incentives that miners receive as a return on their investment. If the direct payment of incentives is prohibited, an uncertainty is created since it is unknown what would be the mechanism to compensate for the work carried out to maintain the network.


Quoted by digital means, lawyer Anton Babenko specified that it would be "difficult to say how the rules that allow the use of mining equipment in Russia prohibit receiving payment in digital currency."

In this regard, it is possible to speculate a scenario in which the miners continue to develop their work (those who accept), but the bitcoins of the rewards go to wallets controlled by the government. In theory, the authorities would receive the funds, deduct taxes, distribute the rewards and encourage activity in the country.

The problem could arise if transparency guarantees are not presented in the allocation of resources, which would generate corruption. Furthermore, the government would not be obliged to transfer the bitcoins either as it could decide to send fiat money instead of the cryptocurrencies.

Interestingly, Jakhon Khabilov, head of the Sigmapool mining consortium, told digital media that in Russia only the smallest mining farms accept payment in cryptocurrencies. The largest receive payment in fiat currency through bank transfers.

It should be mentioned that, according to the record kept by the University of Cambridge, Russia is the third country in the world with the highest processing power in the Bitcoin network with almost 7% hash rate. They are followed by the Russian Federation: China with 65% and the United States with 7.2%.

The regulations that Russia applies to bitcoin and cryptocurrencies in general are generating more confusion about what is the legislative tone with which they are assumed. The country recognizes Bitcoin legally, but maintains prohibitions to use it as a payment method.

The government classifies it as an investment mechanism that is only accessible to qualified operators, in accordance with the provisions issued by the central bank.

Other regulations that could be passed include that mining farms must report their operations to the national government. Processing centers must disclose their computing capacity, how the data is stored, what their services are, and what the operating cost is.

[bitmover]

In this regard, it is possible to speculate a scenario in which the miners continue to develop their work (those who accept), but the bitcoins of the rewards go to wallets controlled by the government. In theory, the authorities would receive the funds, deduct taxes, distribute the rewards and encourage activity in the country.

This makes absolute no sense, because government cannot really control miners.

A mining pool may be based in Russia, but the hashing power may come from somewhere else.

In the end, even if the goverment could effectively track mining pools and miners, miners would just move their operations to a more free country. Or just move their hashing power to a pool based somewhere else.

[stompix]

This makes absolute no sense, because government cannot really control miners.
A mining pool may be based in Russia, but the hashing power may come from somewhere else.

They will just go after miners, pretty easy to spot the little guys, the average consumption per household in Russia is about 2400Kwh per year, an S17 does that in a month, the big guys are even easier to spot, you just have to go through the record of the electric company, how many types of business do you know who have the same electric consumption 24/7 with no spikes or shut down in it?  If they want it, they can find them all in less than a month, and I don't think one ha of solar panel that can be visible from the moon would be a way of hiding your mining operation.

Once identified, they will simply go and ask where do they get their money to pay those bills?
I'm sure that receiving money from a Nigerian prince called Bitfinex LLC each month via a Chinese bank based in the Bahamas will not be a valid excuse.

But, fortunately for us and for the miners in Russia, it's not about the law, it's about the government wanting to enforce those laws, and we all know they are pretty lazy when it comes to this.
One more thing, I would like to see the original of this story and report, google isn't helping me at all with this subject.

[bitmover]

This makes absolute no sense, because government cannot really control miners.
A mining pool may be based in Russia, but the hashing power may come from somewhere else.

They will just go after miners, pretty easy to spot the little guys, the average consumption per household in Russia is about 2400Kwh per year, an S17 does that in a month, the big guys are even easier to spot, you just have to go through the record of the electric company, how many types of business do you know who have the same electric consumption 24/7 with no spikes or shut down in it?  If they want it, they can find them all in less than a month, and I don't think one ha of solar panel that can be visible from the moon would be a way of hiding your mining operation.

Once identified, they will simply go and ask where do they get their money to pay those bills?
I'm sure that receiving money from a Nigerian prince called Bitfinex LLC each month via a Chinese bank based in the Bahamas will not be a valid excuse.

But, fortunately for us and for the miners in Russia, it's not about the law, it's about the government wanting to enforce those laws, and we all know they are pretty lazy when it comes to this.
One more thing, I would like to see the original of this story and report, google isn't helping me at all with this subject.

All this makes sense. A miner could be identified. But a small miner like the one you are suggestions does not receive coinbase transactions. He receives a share which he gets from the pool.

Goverment would identify him, but couldn't still coerce him to pay everything. He could just commit russia government bitcoin address with a fraction of his hashpower, and there is no way he could be tracked.

[Burgalin_LLC]

In this regard, it is possible to speculate a scenario in which the miners continue to develop their work (those who accept), but the bitcoins of the rewards go to wallets controlled by the government. In theory, the authorities would receive the funds, deduct taxes, distribute the rewards and encourage activity in the country.

This makes absolute no sense, because government cannot really control miners.

A mining pool may be based in Russia, but the hashing power may come from somewhere else.

In the end, even if the goverment could effectively track mining pools and miners, miners would just move their operations to a more free country. Or just move their hashing power to a pool based somewhere else.

If it all depends on how the company is doing this year because you know that companies outside the server ruble and blockchains that experiment accepting payments in btc if they see that it does not work or that nobody used the function they remove btc as a means of payment, in Mi The country has a choice but it is not reliable as I found serious security flaws and sorry for the mistake as I understood that there were only 1,500 restaurants that accepted btc hahahaha

[Burgalin_LLC]

Well from my point of view if the government of Russia reaches an agreement as it says in the post, possibly this is to promote more PETRO since we know that it is a cryptocurrency that the government of Russia and Venezuela is promoting and in places like vk (the Russian facebook) is used, but hey how it is a cryptocurrency "backed by oil" I doubt that people have much confidence since we all know the decline that all stocks related to a barrel of oil had in futures

[stompix]

Well from my point of view if the government of Russia reaches an agreement as it says in the post, possibly this is to promote more PETRO since we know that it is a cryptocurrency that the government of Russia and Venezuela is promoting and in places like vk (the Russian facebook) is used,

I highly doubt that usage when the coin has 300 transactions a day
https://explorador.petro.gob.ve/insight
and almost all of them are generated by a few addresses:
https://explorador.petro.gob.ve/insight/address/PPHjLphDotbMey3NrxTyW7hsRHiT7jzJbh

All this makes sense. A miner could be identified. But a small miner like the one you are suggestions does not receive coinbase transactions. He receives a share which he gets from the pool.
Goverment would identify him, but couldn't still coerce him to pay everything. He could just commit russia government bitcoin address with a fraction of his hashpower, and there is no way he could be tracked.

Of course, what you say makes sense also, but in theory...
If you were a small miner, thus making 300-400 $ maximum a month, that after electricity costs would mean at least two s19pro, would you risk for those seven years in prison?
When you're far away it's easy to say, they will not catch me, but would still sleep comfortably at night knowing what your risk once caught?
As for coercion, remember who we're talking about, a government that has no problem making people drink flavored tea, committing suicide by jumping from the 8th floor of a two stories high building, and many more like this. Would you keep on mining if you see news about this every day for a week on national tv?

No, if they want to annihilate home mining, they can, this is not a free country we're talking where you can sue or protest against the government, but as I said before I think they voted something just for the sake of voting, it's not the first time they have no clue what law they've just passed.
I'm sure that once they realize they will either amend it or drop it altogether, or make it that only one branch of the police can act on it and that branch will never take action.

[HeRetiK]

This whole situation sounds really messy. I wonder if that is happening out of malice (ie. trying to get rid of cryptocurrencies) or incompentence (ie. trying to regulate cryptocurrencies).

Either way it looks like Russia plans on falling even further behind, economically.

Well from my point of view if the government of Russia reaches an agreement as it says in the post, possibly this is to promote more PETRO since we know that it is a cryptocurrency that the government of Russia and Venezuela is promoting and in places like vk (the Russian facebook) is used, but hey how it is a cryptocurrency "backed by oil" I doubt that people have much confidence since we all know the decline that all stocks related to a barrel of oil had in futures

I wasn't aware of the alleged ties between the Petro and Russia until now, interesting to learn. It's even more interesting to hear that it's still being pushed. A cryptocurrency issued by Venezuela, backed by oil, sounds like it should be long dead by now.

[Darker45]

The Ministry of Finance proposed a set of amendments to the law that would prohibit all cryptocurrency transactions, limiting their use to three areas: inheritance, bankruptcy-related operations, and court executions.

I find this really weird. How in the world did the country's ministry of finance came up with these three uses? I am a bit interested to know the process or study by which they determined that Bitcoin and crypto transactions are best limited to these areas. I bet this is another case of implementing Bitcoin and crypto-related policies without understanding Bitcoin and crypto first. 

Well from my point of view if the government of Russia reaches an agreement as it says in the post, possibly this is to promote more PETRO since we know that it is a cryptocurrency that the government of Russia and Venezuela is promoting and in places like vk (the Russian facebook) is used, but hey how it is a cryptocurrency "backed by oil" I doubt that people have much confidence since we all know the decline that all stocks related to a barrel of oil had in futures

I wasn't aware of the alleged ties between the Petro and Russia until now, interesting to learn. It's even more interesting to hear that it's still being pushed. A cryptocurrency issued by Venezuela, backed by oil, sounds like it should be long dead by now.

Petro was dead right from the start so I guess there is no such thing as Russia supporting, much less promoting, Petro.

[Tipstar]

It makes no sense for them to let mining but prohibit miners from getting reward. All they are looking for is a way to get the cut out of miners profit. They haven't decided how and how large the cut would be. Crypto mining has became a lucrative industry in Russia. With cheap gas electricity from siberia, bitcoin could be a way for them to gain international reserves on current embargo situation.

[dothebeats]

The communist dream. I don't know how the Russian government would do this exactly, but the intent is clear: they want the miner's money on the miners' own expense, and it's straight-up robbery made legal on the government terms. I doubt that some serious Russian miners would still stick into hashing on the said country. They'll move into other places right before this reform is passed on the law legalizing mining operations and the Russian government effectively shot themselves on their knees.

They could have just asked nicely, I mean, in the form of taxation without that aggressive wording. Stating threats almost immediately to get what you need does not work 100% of the time.

[YOSHIE]

The information you provide is misleading, you are not quoting the good side, you are only quoting the bad information.

Try to read here the update on 10 September 2020.
Source: https://bitfinance.news/en/russia-to-ban-miners-from-receiving-crypto-rewards/

The measures are considered contradictory in view of the fact that cryptocurrencies are based precisely on mining. In this regard, Dmitry Sakharov, CEO of the Moscow Digital School, stated that “the situation is complex and it is not clear how the miners would receive the incentives.”

Speculation about it has not been long in coming. It is presumed that Russian miners will continue to mine cryptocurrencies but bitcoins will become controlled through government wallets.

You see the black label that's the answer to all of that, the news you give.
OP, currently crypto in Russia looks very good from and miners, investors, investments etc. really enjoy it.

OP, this problem is still the pros and cons, what you need to know in Russia is that 70% of the people use digital / crypto currencies like Bitcoin, the rest don't know about crypto.

So, stop spreading unclear news, in the future if there is news about crypto in Russia, wait for an official decision from the government, then the OP will bring it to this Forum.

[zasad@]

Let me write you a few facts:
Russian miners are already registering as self-employed citizens and paying taxes.
Here is a fresh video of a famous Russian miner who pays taxes and films it
https://www.youtube.com/watch?v=HVTCAVlrA3c

In Irkutsk and neighboring regions, the cost of electricity is $ 0.011 per kilowatt. Miners consume huge amounts of electricity, and if this business is banned, the economy will suffer huge losses.

If it's even easier to explain, then the prohibition of mining in Russia can be compared to the fact that you shoot your employee in the foot, and then send him to work

[stompix]

OP, this problem is still the pros and cons, what you need to know in Russia is that 70% of the people use digital / crypto currencies like Bitcoin, the rest don't know about crypto.

Maybe 0.7%, that would be far more likely.
How in the name of god would 100 million people (Russia's population is close to 150) be able to use Bitcoin?
Even if only Russians would use BTC  and no other country it will take 7 months for each of them to make one tx.
There are only 23 million addresses in the whole chain with a balance higher of 1$, where would the rest be?

Nope, 70% is completely absurd, 7% is exaggerated, 0.7 which means 1 million is far more likely to be the real thing.

So, stop spreading unclear news, in the future if there is news about crypto in Russia, wait for an official decision from the government, then the OP will bring it to this Forum.

It's not FUD and it's nothing unclear.
There is a proposal waiting in the duma for a vote exactly with the above.
Simple as that.

[zasad@]

I read analytical studies, it also said that in Russia a little more than a million people are interested in cryptocurrencies in detail.
An interested person does not mean someone who uses them.
According to other analytics, there are only 500,000 miners in Russia.
I have been trying for a long time to find out how these studies went, but this tells us that 1.5% of the country's population are interested in or use cryptocurrencies

[aioc]

I read analytical studies, it also said that in Russia a little more than a million people are interested in cryptocurrencies in detail.
An interested person does not mean someone who uses them.
According to other analytics, there are only 500,000 miners in Russia.
I have been trying for a long time to find out how these studies went, but this tells us that 1.5% of the country's population are interested in or use cryptocurrencies

If only 1.5% are interested or have used Cryptocurrency why the hassle of implementing and banning miners and users of Cryptocurrency, they are only small community, Russia has a lot of issues they should not bother creating laws banning and spending money prosecuting miners and users of  Cryptocurrency, they have bigger issues like the Corona virus and their economy as well/

[malevolent]

I find this really weird. How in the world did the country's ministry of finance came up with these three uses? I am a bit interested to know the process or study by which they determined that Bitcoin and crypto transactions are best limited to these areas. I bet this is another case of implementing Bitcoin and crypto-related policies without understanding Bitcoin and crypto first. 

If they wanted to ban anything to do with them except possessing for current holders, this is what they could do.

The information you provide is misleading, you are not quoting the good side, you are only quoting the bad information.

Try to read here the update on 10 September 2020.
Source: https://bitfinance.news/en/russia-to-ban-miners-from-receiving-crypto-rewards/

The measures are considered contradictory in view of the fact that cryptocurrencies are based precisely on mining. In this regard, Dmitry Sakharov, CEO of the Moscow Digital School, stated that “the situation is complex and it is not clear how the miners would receive the incentives.”

Speculation about it has not been long in coming. It is presumed that Russian miners will continue to mine cryptocurrencies but bitcoins will become controlled through government wallets.

You see the black label that's the answer to all of that, the news you give.
OP, currently crypto in Russia looks very good from and miners, investors, investments etc. really enjoy it.

OP, this problem is still the pros and cons, what you need to know in Russia is that 70% of the people use digital / crypto currencies like Bitcoin, the rest don't know about crypto.

So, stop spreading unclear news, in the future if there is news about crypto in Russia, wait for an official decision from the government, then the OP will bring it to this Forum.

Being only allowed to transact using a government wallet (lol) is as dark a scenario as it gets.

[zasad@]

I read analytical studies, it also said that in Russia a little more than a million people are interested in cryptocurrencies in detail.
An interested person does not mean someone who uses them.
According to other analytics, there are only 500,000 miners in Russia.
I have been trying for a long time to find out how these studies went, but this tells us that 1.5% of the country's population are interested in or use cryptocurrencies

If only 1.5% are interested or have used Cryptocurrency why the hassle of implementing and banning miners and users of Cryptocurrency, they are only small community, Russia has a lot of issues they should not bother creating laws banning and spending money prosecuting miners and users of  Cryptocurrency, they have bigger issues like the Corona virus and their economy as well/

There are many laws in russia not to make the situation better, but vice versa.
This is a very good way to get rid of competitors and take away their business. If you do not have support in political or security structures, then your business will be quickly closed.

Let me explain with an example. At the beginning of the year, shopping centers began to be checked for anti-terrorist security. The new shopping centers had no problems. And what to do in other cities, where there are many shopping centers built in 1970-1980 and there are a lot of them? They do not meet these standards (it is impossible to increase the width of the corridors, the width of the stairs and other standards).

Business owners paid bribes to obtain permits (falsified attendance figures, changed the type of business activity, and so on)

That is, according to the documents, all centers comply with the new anti-terrorist standards, but in fact nothing has changed. And this is how most of the norms and laws in Russia work.

It will be the same with mining, it will be disguised as data centers and other permitted activities.

According to the documents, there will be no mining in Russia if it is banned, but in fact large miners will ruin the small ones by sending controlling organizations to them.

This is how everything works in Russia.

[malevolent]

In Germany one Bitcoin ATM operator got rid of competition by encouraging the adoption and enforcement of burdensome regulations. Link. Not that much different, although in Russia everything is always at another level, I heard it's often officials themselves using their powers to take over businesses to enrich themselves.

[zasad@]

In Germany one Bitcoin ATM operator got rid of competition by encouraging the adoption and enforcement of burdensome regulations. Link. Not that much different, although in Russia everything is always at another level, I heard it's often officials themselves using their powers to take over businesses to enrich themselves.

People not only become officials in order to take over someone else's business, but also sew up their own or receive bribes.
 Russia offers great opportunities, unlike other countries. If you invest $ 1,000,000 in a business, then in the USA or Europe you will honestly pay taxes and earn 5-10% profit per year.
In Russia, you earn 100% of the annual profit, and if you have the necessary acquaintances, then 50% of the profits will be taken from you, and the rest will remain with you. Even if 80% of your profits are taken away from you, your investment will still be more successful.
If someone thinks that there are stupid laws in Russia, he is wrong. All these laws are being written so that officials, security officials and other controlling organizations have more power over business.