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Problems and Tasks of Legal Support of Cryptocurrency Mining in Energy Law
 
PIIS0021429-1-1
DOI10.18572/2312-4350-2022-2-80-83
Publication type Article
Status Published
Authors
Viktoria V. Romanova 
Affiliation:
Kutafin Moscow State Law University
V.A. Musin Research Center for the Development of Energy Law and Modern Legal Science
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 2
Pages80-83
Abstract

The problems of the energy sector related to cryptocurrency mining have been repeatedly noted by representatives of the public authorities and the expert community. Unauthorized grid connections and theft of electric energy are mentioned among the problems. This is typical of “black” miners. There are also “home” miners, who pay for electricity at preferential rates for the population. Another risk to energy security is the increase in the carbon footprint of cryptocurrency mining. Current laws on the electric power industry do not provide for the peculiarities of the legal status of persons engaged in cryptocurrency mining in the electricity market. This gap should be filled. The article suggests possible options for harmonization of provisions of the electric power laws in terms of cryptocurrency mining.

Keywordscryptocurrency mining, energy security, energy law, energy law and order
Received09.08.2022
Publication date09.08.2022
Number of characters9090
Cite     Download pdf
1 According to the Energy Security Doctrine of the Russian Federation, the objectives of energy security primarily include reliable and sustainable provision of Russian consumers with energy resources. Emergencies, overload of grids leading to a failure in the energy supply to the consumers are typical of operations related to cryptocurrency mining. Therefore, the appropriateness or inappropriateness of the legal regulation of cryptocurrency mining, including for the purpose of energy security, is currently discussed a lot.
2 In November 2021, the Ministry of Finance and the Ministry of Energy proposed to equate cryptocurrency mining with entrepreneurship and to regulate the procedure for paying taxes. However, the Bank of Russia is totally against the appearance of “money surrogates” in the country. [1]
3 On February 18, 2022, information appeared in public sources that the Ministry of Finance of Russia sent a draft law on the regulation of cryptocurrencies to the Government of the Russian Federation. The draft federal law was developed under the instruction of the Government of the Russian Federation on the basis of the approved concept of regulating the mechanism for organizing the digital currency circulation.
4 The Bank of Russia sees things differently and indicates multiple risks. Let us dwell in more detail on the “energy” risks of cryptocurrency mining.
5 The 2022 Report of the Bank of Russia Cryptocurrencies: Trends, Risks, and Measures highlights, among other things, the risks to energy security, one of which arises due to the fact that an increase in mining volumes entails significant consumption of electricity, an increase in the load on the grids, and increases risks of emergencies, which may have a negative impact on the stability of the energy supply to residential buildings, social infrastructure facilities, and enterprises. [2]
6 The second energy security risk is the increase in the carbon footprint of cryptocurrency mining. A study by Chinese scientists found that the carbon footprint of bitcoin mining in China was comparable to the carbon footprint of one of China’s major cities and jeopardized the implementation by the country of its carbon reduction targets, which was one of the reasons to ban mining. [3]
7 The problems of the energy sector related to cryptocurrency mining have been repeatedly noted by representatives of the public authorities and the expert community. Unauthorized grid connections and theft of electric energy are noted among the problems. This is typical of “black” miners.
8 Thus, Rosseti Northern Caucasus stopped 35 cases of unrecorded electricity consumption by mining farms in the area of the company’s operations in 2019–2020. The volume of the stolen resource amounts to 45.3 million kWh. The cost of kilowatthours “stolen” by the miners exceeds 230 million rubles. The unrecorded resource consumption (theft) leads to voltage drops and can provoke technological disturbances in the operation of power facilities. Consequently, theft directly affects the quality and reliability of energy supply to both the residents of the republics and the social structures. [4]
9 There are also “home” miners, who pay for electricity at preferential rates for the population.
10 The Irkutsk region is considered the capital of cryptocurrency mining in Russia due to the lowest electricity prices: mining farms use a lot of energy to operate computing equipment and cooling systems. Irkutskenergosbyt (the guaranteeing supplier of electricity in the region being a member of Irkutskenergo) began to bring actions in large numbers against the owners of mining farms in private homes in the region. The company believes that the farms perform entrepreneurial activity while buying electricity at low tariffs for the population. As the company informed Kommersant, since the beginning of the year, Irkutskenergosbyt has filed 85 lawsuits against the farm owners for 73.3 million rubles. So far, only nine cases have been won: by a court decision, private farms were transferred to commercial tariffs. Moreover, Irkutskenergosbyt will be able to return 18.7 million rubles after the tariff is recalculated. [5]
11 The Council of Energy Producers Association proposes to ensure conditions, under which miners consume electricity on equal terms with the industry, while noting that in order to improve the situation with the cryptocurrency miners, it is necessary to introduce a differentiated fee for electricity depending on the consumed volume. [6]
12 The Association of Guaranteeing Suppliers and Energy Retail Companies proposes to allow energy companies to disconnect illegal cryptocurrency miners from the grids. [7]
13 The Ministry of Energy of Russia believes that cryptocurrency mining should be introduced into the legal field, and a proportionate fee for technical connection and electricity consumption as well as taxes should be received. [8]
14 The Chairman of the State Duma Energy Committee notes that it is necessary to make a decision to ban mining or to create conditions for mining that would not use cheap electricity intended for the population. [9]

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1. URL: https://www.mk.ru/economics/2021/12/09/maynery-obeskrovili-rossiyskoe-elektrichestvo.html 
2. URL: https://cbr.ru/Content/Document/File/132241/Consultation_Paper_20012022.pdf 
3. URL: https://cbr.ru/Content/Document/File/132241/Consultation_Paper_20012022.pdf 
4. URL: https://www.rossetisk.ru/press_center/company_news/rosseti_severnyy_kavkaz_vyyavili_35_faktov_  mayning_khishcheniy_elektroenergii_na_230_mln_rubley/
5. URL: https://sbyt.irkutskenergo.ru/news/4265.html 
6. URL: http://np-cpp.ru/news/rossiyskie-energetiki-vystupili-za-differentsiatsiyu-energotarifov-dlya-  maynerov/?sphrase_id=13873
7. URL: http://npgp.ru/press-tsentr/novosti-otrasli/3994/?sphrase_id=61490 
8. URL: https://minenergo.gov.ru/node/22602 
9. URL: https://tass.ru/ekonomika/13488215?utm_source=yandex.ru&utm_medium=organic&utm_  campaign=yandex.ru&utm_referrer=yandex.ru

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