Sergey Bezdelov, Director of Russia’s Industrial Mining Association, recently disclosed that Russia mined around 54,000 BTC, equivalent to more than $3 billion, last year, as reported by local news outlet Izvestia.
This mining activity resulted in approximately 50 billion rubles ($556 million) in taxes being generated for the Russian government.
Bezdelov is optimistic that the recent legalization of crypto mining will attract more investors and lead to an increase in tax revenue. In July, Russia’s State Duma passed a bill that legalized Bitcoin mining and permitted the use of cryptocurrencies in international trade. This decision officially recognized crypto mining as a legitimate economic activity, requiring legal entities to register and comply with specific energy consumption limits.
Observers in the market have noted that the legalization of mining is part of a broader strategy to expand Russia’s presence in the crypto space in response to Western economic sanctions. In recent weeks, the Russian government, under the leadership of Vladimir Putin, has taken steps to leverage the growing industry to mitigate the impact of these sanctions.
Strategies for evading sanctions
Blockchain analytics firm Chainalysis has raised concerns about the potential for Russia to use local crypto exchanges, such as Garantex and Exved, to circumvent sanctions.
According to Chainalysis, the sanctioned Garantex exchange has processed nearly $100 billion in transactions since 2018 and possesses significant liquidity across major blockchains, which could facilitate continued cross-border trade for Russia.
Chainalysis stated:
“Garantex plays a central role in Russia’s crypto market and is likely to remain crucial despite being designated by the Office of Foreign Assets Control (OFAC) in the U.S. and the Office of Financial Sanctions Implementation (OFSI) in the UK.”
The firm also flagged Exved as another potential avenue for Russia to engage in sanctions evasion through crypto exchanges.
Chainalysis highlighted that Exved has ties to InDeFi Bank and was co-founded by Sergey Mendeleev of Garantex and former KGB officer Alexander Lebedev. The exchange is said to have facilitated imports and exports even before Russia’s recent legislative changes concerning digital assets.