Russia Demands IP Address Data from Crypto Miners

Russia is increasing monitoring regulations for crypto miners. According to Bein Crypto, the country’s Ministry of Finance will now require crypto miners to provide IP addresses associated with mining. Failure to do so means “removal” from the official registry of crypto miners in the country, and they will not be allowed to operate. A translation from Consultant.ru specifically mandates that crypto miners reveal the “network addresses used for the implementation of digital currency mining.”

There are two major reasons Russia’s Minister of Finance is increasing the information requirement from registered crypto miners: proper tax filing and energy consumption.

Proper Tax Filing: Monitoring the Hardware

Monitoring hardware through its network addresses is an effective way of knowing its output. Network information, such as an IP address, gives the ministry information about its actual physical location. Knowing its location means knowing its actual mining operations, especially its profits.

This gives the ministry an idea of whether the tax filed matches what they earned. The Ministry of Finance seeks to ensure they get more from crypto mining. Although it is a highly monitored industry in Russia, the country is still losing as much as $122 million in tax revenue. Physically locating the rig used in crypto mining helps ensure proper tax payments.

Controlling Energy

Another reason Russia’s Ministry of Finance is upping the ante on registry requirements is energy use. Crypto mining is power-hungry, and Russia has to make sure the energy used for crypto mining does not go to waste.

Russia, with its nearly infinite fuel supply, will not have any problem providing energy to its citizens. However, sanctions have hit the country hard in finding parts to maintain its operations. United 24 Media reports that the country has turned to Iran for parts to circumvent sanctions and has set up facilities to build its own.

However, any power drain from crypto mining could jeopardize the local population. An IP address could help in locating these crypto mining companies faster.

In terms of security, information provided by crypto miners is not public information. Network and IP addresses are only provided to government institutions for verification and monitoring.

Not the First Country

Registration and monitoring of crypto mining is common for large-scale operations in countries that allow the operation. However, few countries monitor crypto operations up to the “network address” level.

Before Russia, Kazakhstan required crypto mining companies to provide the pool of IP addresses associated with the operation. Beyond the initial submission of IP addresses, operations should also report every three months, according to cis-legislation.com.

Government oversight is nothing new, especially in tech-related industries. However, the crypto industry is unique because its technical requirements require massive resources. The government has to extend its monitoring, including its network and IP addresses.

On the other hand, this can create security concerns, especially when these IP addresses are leaked. When that happens, every crypto miner in Russia is in trouble, as their assets are exposed to attacks.

Ultimately, crypto miners have to work with the government if they want to continue their operations. But sharing their network and IP address means they need to beef up security against potential attacks in case their IP address is leaked.