Why is there mining? Many experts agree that the development of mining on the territory of the Russian Federation could contribute to the decentralization of databases of various structures, which could significantly increase the speed of information exchange on a global scale. Moreover, this would allow to partially solve the problem of unemployment, as well as attract investors.
The main problem at the moment is that the legal framework and taxation system for mining activities in the Russian Federation is still at an initial level. At the same time, it was recently decided to block the import of mining equipment. So, what problems does a Russian miner have to face?
Creation of a data center for mining
Data centers are loaded gradually, not entirely. Partial loading is provided by the efforts of miners, while free space is allocated for hosting. This is the most optimal scenario for quick investment processing and risk diversification from the point of view of entrepreneurship.
At the same time, hosting can work in completely different ways. For example, on the basis of a fixed monthly fee or depending on the percentage of the miner’s profit, from which the consumed energy and resources for maintenance are deducted.
According to the co-founder of Altcoinlog, Alexander Leusenko, mining equipment may fail during operation for various reasons. Moreover, mining performance is significantly degraded by the increasing complexity of the network. However, active technological progress contributes to the frequent updating of the equipment fleet by miners. Thus, entrepreneurs must have reliable channels to purchase fresh equipment.
Depending on the total number of devices to be used, equipment downtime costs can reach thousands of dollars for each device. This also requires shipping costs, which start at $ 300 per piece of equipment.
Russian benefits for mining
The power industry in the Russian Federation is quite developed. This is a very beneficial help for the development of the mining business in the country, since electricity in it is relatively cheap, and there is an abundance of generating capacities, especially in industrialized regions where large power plants operate. By the way, this makes it possible for a mining company to conclude an agreement directly with a generating company from the UES of the Russian Federation and purchase electricity at generation rates.
In addition, the climatic factor in most Russian regions is quite favorable for mining most of the year. This allows you to significantly save electricity, since, as you know, the mining process is accompanied by an increased release of heat from the equipment. In Russian natural conditions, it is possible to cool equipment for the most part without spending money on sophisticated cooling systems.
Hardware import problem
An obstacle in the way of those intending to create their own data center is that recently, the state structures of Russia have become much more strict control over the turnover of equipment for mining cryptocurrencies. In simple terms, this type of electronics is now subject to restrictive measures that regulate the import of devices with encryption and cryptography functions.
However, not every device of this kind necessarily belongs to the prohibited category. For example, the following are not directly intended for cryptographic activity:
- video cards;
- video card farms;
- programmable gate arrays (FPGA), etc.
In this regard, it should be noted that the listed devices can be declared under other HS codes and imported and sold on the territory of the Russian Federation in a completely legal manner. But in this case, a detailed analysis of the manufacturer’s documentation from a technical and legal point of view is necessary.
If, for example, we talk about GPU farms, then the issue can often be resolved by indicating in the customs declaration the video cards and motherboards installed in these systems as separate elements, and this is logical since they can be used regardless of the overall assembly.
What is the risk of the miner?
Obviously, this type of activity does not guarantee sustainable income. In addition, market dynamics constantly affect the amount of profit, although in general, mining is still a profitable type of business.
In addition, the exchange rate of digital currencies is changing. The cost, in particular, of bitcoin, directly affects the profitability of mining this cryptocurrency. And if it rises in price, then the cost of network computing for its mining increases accordingly.
The imperfection of the legal framework
Today, mining aimed at the development of cryptocurrency is considered as entrepreneurship that is not prohibited for individual entrepreneurs and legal entities. It logically follows from this that mining activities do not need a special regulatory law and can be taxed on a common legal basis with all Russian entrepreneurship. At the same time, we are talking about the minimum value, below which the miner-entrepreneur is not obliged to pay tax until it goes. Everyone is obliged to pay tax on this activity.
But since the Federal Tax Service does not yet have a common understanding about taxing cryptocurrency miners of individuals, individual entrepreneurs and legal entities, local tax services must calculate the tax rate in each case individually. Naturally, this approach is cumbersome and inconvenient – one can only hope that the issue will eventually be resolved taking into account common interests.
In Russia, the law does not yet regulate the circulation of digital currencies, and Russia itself is still weak in the legal sphere, so it is not yet clear which section of taxation will relate to such activities.
There is also no understanding at what rate taxes will be levied on exchange transactions with digital currencies since their exchange rates change quite quickly.