Russia Proposes Forced Labor for Unregistered Bitcoin Mining

Russia is moving to escalate penalties for unregistered cryptocurrency mining, proposing criminal charges that include forced labor and prison sentences. The Ministry of Justice published draft amendments to the Criminal Code on December 30, aiming to curb widespread noncompliance despite the industry's legalization in 2024.

Authorities indicate that most operators continue to avoid registration and taxation. The new measures target individuals and organized groups, with penalties ranging from fines to long-term forced labor. The draft amendments are currently open for public consultation.

The Russian government is taking a harder stance on illegal cryptocurrency mining. The Ministry of Justice published draft amendments to the Criminal Code on December 30, 2024. These amendments aim to reclassify many forms of illegal crypto mining from an administrative offense into a criminal one.

The proposed penalties are severe. Individuals who mine cryptocurrency without proper registration could face:

• Fines ranging from 500,000 to 1.5 million rubles
• Up to two years of forced labor
• Up to 480 hours of compulsory labor in less severe cases

Harsher penalties are reserved for large-scale or organized operations. Mining that generates significant or especially large income, or involves coordinated groups, could result in fines of up to 2.5 million rubles, forced labor for up to five years, or prison sentences of similar length. Equipment confiscation remains a possibility.

The push for criminal penalties stems from low adherence to the regulatory framework established in 2024. President Vladimir Putin signed mining legislation in the summer of 2024 to legalize the sector. However, authorities state that most operators continue to avoid registration and taxation.

Deputy Finance Minister Ivan Chebeskov stated in June that only about 30% of miners had registered with the Federal Tax Service. This leaves the majority operating in what officials describe as a "gray zone." Previous measures, including fines of up to 2 million rubles and equipment seizures, have failed to curb the activity effectively.

Illegal mining operations are causing significant strain on local infrastructure. Authorities report that these operations, often linked to electricity theft or activity in restricted regions, continue to strain local power grids.

Regions in Russia have reported outages specifically tied to unregistered mining. This has prompted temporary bans during periods of peak winter demand. Officials estimate that illegal operations consume billions of kilowatt-hours annually. Law enforcement actions have included arrests of utility employees accused of facilitating illegal mining and the shutdown of large-scale farms.

Russia’s current framework distinguishes between small-scale and commercial miners. Individuals consuming less than 6,000 kilowatt-hours of electricity per month are classified as private persons. They may mine without entering the special register, though they must pay personal income tax on mined cryptocurrency.

Larger commercial miners and infrastructure operators face stricter rules. They are required to register in Russia, submit monthly production reports, and comply with regional restrictions. The new draft amendments seek to enforce these requirements through criminal liability.