Russia generated over $3 billion in Bitcoin mining revenue last year, providing a significant boost to tax income despite facing international sanctions.
Chainalysis has issued a warning that Russia might exploit local exchanges such as Garantex to aid in tax evasion. Sergey Bezdelov, Director of Russia’s Industrial Mining Association, disclosed that Russia mined about 54,000 BTC, worth over $3 billion last year, as reported by the local news outlet Izvestia.
This mining activity is said to have generated around 50 billion rubles ($556 million) in tax revenue for the Russian government. Bezdelov anticipates that the recent legalization of crypto mining will attract more investors and further boost tax contributions. In July, Russia’s State Duma passed legislation legalizing Bitcoin mining and allowing crypto to be used in international trade. This law recognized crypto mining as a legitimate economic activity, mandating that legal entities either register or adhere to specific energy consumption limits.
Observers have noted that this mining legalization is part of Russia’s broader effort to expand its crypto operations, particularly in response to Western sanctions. Recently, the Putin administration has made several moves to leverage the emerging crypto industry to circumvent these sanctions.
As for sanction evasion, blockchain analytics firm Chainalysis expressed concerns that Russia could use domestic crypto exchanges like Garantex and Exved to bypass restrictions. Chainalysis noted that the sanctioned Garantex exchange has handled nearly $100 billion in transactions since 2018, with significant liquidity across major blockchains that could help sustain Russia’s cross-border trade.
In a statement, Chainalysis highlighted Garantex’s importance in Russia’s crypto market, despite being blacklisted by both the U.S. Office of Foreign Assets Control (OFAC) and the UK’s Office of Financial Sanctions Implementation (OFSI). The firm also raised alarms about Exved, which it identified as another exchange Russia could leverage for evading sanctions. Exved has ties to the InDeFi Bank and was co-founded by Sergey Mendeleev of Garantex and ex-KGB officer Alexander Lebedev. It has reportedly been involved in facilitating imports and exports, even before Russia’s recent regulatory changes concerning digital assets.
