Russia elevates AI over Bitcoin with impending ban on data center mining

Anticipating growing demand for computing power to meet the needs of digitalization and artificial intelligence, Russia is now going to ban cryptocurrency mining in data centers.

Provisions prohibiting the mining of digital coins at such facilities have been added to a bill, drafted on President Putin’s order, which aims to expand Russia’s capabilities to process big data and generate AI.

Russian government to ban crypto miners from data centers

Authorities in Russia plan to ban the mining of cryptocurrencies in data processing centers (DPCs). The main motive behind the move is to prevent Bitcoin miners from claiming the benefits intended to boost Moscow’s potential in the AI race, such as access to cheap power.

Amendments to that end have been added to a draft law dedicated to prioritizing the development of data centers. The changes have been made ahead of its second reading in the State Duma, the lower house of Russian parliament, media reports revealed this week.

The bill introduces new provisions to several laws that lawmakers have already finalized, the business news outlet RBC unveiled in a post, quoting a representative of the Office of the Chief of Staff of the Russian Government and Deputy Prime Minister Dmitry Grigorenko, who oversees the regulatory effort.

The updated legislation now defines DPCs as communication facilities. These will be listed in a special register maintained by the Ministry of Digital Development, Communications and Mass Media of the Russian Federation.

Registered data centers will be prohibited from hosting crypto mining infrastructure and carrying out mining activities, the article detailed. The Duma is expected to vote on the proposal by the end of this month, the source familiar with the process told the publication.

According to the official, DPCs will be offered discounted electricity rates to lower their operational costs, as well as quick connection to the power grid to bypass bureaucratic hurdles – benefits that have been denied to crypto mining firms since Moscow legalized their business last year.

Digitalization and the development of artificial intelligence (AI) involve storing and processing huge amounts of data, and in order to effectively do that, it’s necessary to increase the number and capacity of data centers, the government representative explained, elaborating:

“Transparent and understandable regulation is the first step. We will legislatively establish that a data center is a communications facility, not just a server room. Clear rules will create basis for additional support measures.”

Russia may be turning on cryptocurrency miners

The preferential treatment of data centers comes on the order of Vladimir Putin, who instructed the government to work out ways to support the sector back in 2020. The draft law was submitted to the Duma the following year and passed on first reading in 2022.

The crypto mining industry, however, which was regulated with a law signed by the Russian President in 2024, has seen quite a different attitude from both federal and local authorities. Since the ruling in 2024, activity has been banned in about a dozen territories, from the Far East to occupied Ukraine.

Addressing participants in a development forum last week, Putin justified the mining restrictions, which will be in place for the next six years in some corners of his vast country, with the need to wisely exploit Russia’s resources. Quoted by the Kremlin’s press service, he explained:

“We were recently happy we had a surplus of electricity in some regions. But they began actively mining there, and governors started complaining to me … We had to make certain decisions.”

Cryptocurrency miners taking advantage of low, often subsidized electricity rates in places like the Siberian Oblast of Irkutsk have been blamed for turning energy surpluses into power deficits. Although some prohibition requests from regional officials have been turned down by the executive arm in Moscow, citing the risk of declining budget receipts and energy revenues.

The government’s latest move against the mining business in Russia, which aims to solve another shortage, that of computing power, is likely to create more issues. For example, the largest data center in the Irkutsk region is run by the mining giant BitRiver.

If the law is adopted in its current form, it’s likely to hurt not just the mining sector, but also the DPC industry, according to blockchain, energy and digital finance analyst Oleg Ogienko. Speaking to the local information portal IrCity, he noted that a number of data center operators have mining hardware installed at their sites and predicted that the new rules will result in financial losses for these companies.

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