State-Backed Crypto Mining Farm Under Construction in Russia’s Buryatia
Cryptocurrency mining is the process of creating digital currencies such as Bitcoin and Ether. It involves a lot of calculations and takes up a great deal of energy.
It’s why a growing number of mining farms are popping up all over the world. Many of them are based in countries with favourable climates and cheap electricity.
Tax Incentives
Cryptocurrency mining is a complex operation that requires enormous computing power to solve complicated mathematical puzzles. It guzzles electricity and often uses fossil fuels.
But that doesn’t have to be the case, and many of these facilities are now utilizing renewable energy sources and repurposing abandoned industrial infrastructure.
In northern Norway, for instance, a crypto mining facility called Bitfarms operates in a former military base in Honefoss. The chilly climate allows the company to use outside air to cool its mining computers, cutting down on energy consumption and operating costs.
Meanwhile, in Sweden, HIVE Blockchain runs one of the largest crypto mining farms in the country. The 30MW facility draws energy from two hydropower plants nearby.
But that doesn’t mean these facilities aren’t causing significant environmental impacts. The public debate around crypto mining typically relies on the image of massive facilities burning fossil fuels or stealing electricity from the grid, which is far from the truth.
Zero Taxes on Land and Property
After the Ukraine war and ensuing financial sanctions, Russia has reversed its position on cryptocurrency mining. As a result, a 100-megawatt crypto-mining data processing center is under construction in Buryatia with government support.
It will be built by a subsidiary of Russia’s largest crypto-mining colocation service provider, BitRiver. The project will receive a broad set of incentives, including zero taxes on land and property, insurance premiums reduced to 7.6%, and a reduced income tax rate, according to RBC.
The facility will also pay for electricity at half the regular tariff, officials say. The project is being supported by the state-owned Corporation for the Development of the Far East (KRDV), which specializes in supporting investment projects.
Acquisition, use and disposition of residential real estate in Russia is regulated by several laws. These include the Housing Code, the Civil Code of the Russian Federation and Federal Law # 122-FZ on State Registration of Titles to and Contracts with Real Property.
Insurance Premiums Reduced
In 2022, a state-owned gas giant Gazprom Neft entered into a partnership with a crypto mining firm BitRiver to provide the latter with electricity generated by petroleum gases. The company also started developing a digital infrastructure to make use of the resulting power.
The Russian state government has a long history of supporting business and technological achievements in the country, so it?s no surprise that a state-backed cryptocurrency mining farm is on the way to Buryatia. In the southwestern corner of Russia, a multi-billion dollar industrial complex is slated to go up in the coming months. It will boast a slew of modern technologies, including smart buildings, solar panels and electric cars. The facility will be able to mine some of the hottest cryptocurrencies and it will be in the hands of some of the best talent around.
The site is a hive of activity, with more than 300 workers on hand to help keep things ticking over. A slick new website and mobile app, designed to promote the company and the products it manufactures, is set to launch later this year.
Reduced Income Tax Rate
Crypto mining is a lucrative activity that requires considerable computing power. However, it is not without tax implications. Generally, the reward tokens/virtual currency payments received by crypto miners are taxed as ordinary income upon receipt and subsequently, when they are sold or exchanged.
Consequently, the Russian government is offering taxpayers an incentive to pursue crypto mining in Buryatia. This is in line with the region’s legal status as a territory of advanced development, a special economic zone that is incentivized to attract national and foreign investments.
The crypto mining center will be located in a village of Mukhorshibir in Buryatia, a republic that is part of east Siberia. The state-owned Corporation for the Development of the Far East (KRDV) is supporting the project with a number of government support tools, including zero land and property taxes, reduced insurance premiums, and a reduced income tax rate.
Source: Plato Data Intelligence: PlatoAiStream