Russia Proposes Criminal Penalties for Unregistered Mining as Riot Platforms Expands Funding Capacity

The cryptocurrency mining industry faces diverging regulatory pressures as Russia proposes harsh criminal penalties for unregistered operations while U.S. mining companies continue expanding their funding capabilities to scale infrastructure.

Russia Escalates Enforcement with Criminal Penalties

Russia's Ministry of Justice published draft amendments on December 30 that would transform illegal cryptocurrency mining from an administrative violation into a criminal offense, just over a year after the country formally legalized the industry ^[1]. The proposed legislation comes in response to widespread noncompliance with regulations that took effect in 2024 following President Vladimir Putin's signing of mining legislation.

Individuals operating without proper registration could face fines between 500,000 and 1.5 million rubles, or up to two years of forced labor under the draft law ^[1]. Courts would also have the authority to impose up to 480 hours of compulsory labor for less severe violations. Operations generating substantial income or involving organized groups could result in fines reaching 2.5 million rubles, forced labor for up to five years, or equivalent prison sentences ^[1].

The harsh measures reflect authorities' frustration with compliance rates. Deputy Finance Minister Ivan Chebeskov stated in June that only approximately 30 percent of miners had registered with the Federal Tax Service, leaving the majority operating in what officials characterize as a "gray zone" ^[1].

Enforcement Challenges and Grid Concerns

Russia's current regulatory framework distinguishes between small-scale private miners consuming less than 6,000 kilowatt-hours monthly, who can operate without registration while paying personal income tax, and commercial operators who must register, submit monthly production reports, and comply with regional restrictions ^[1].

Authorities report that illegal mining operations, frequently associated with electricity theft or activity in restricted regions, continue straining local power grids ^[1]. Multiple regions have reported outages linked to unregistered mining, prompting temporary bans during peak winter demand periods. Officials estimate that illegal operations consume billions of kilowatt-hours annually ^[1].

Previous enforcement measures, including fines up to 2 million rubles and equipment seizures, have proven insufficient to curb the activity ^[1]. The draft amendments remain open for public consultation.

U.S. Miner Expands Funding Capacity

Meanwhile, Riot Platforms initiated a new $500 million at-the-market equity offering this week, replacing a prior program established in August 2024 ^[2]. The filing with the U.S. Securities and Exchange Commission grants the company discretion over timing and volume of share sales through the Nasdaq Capital Market.

The company sold approximately $600.5 million worth of stock under the previous agreement, leaving about $149.5 million of unused capacity ^[2]. Proceeds from the new program will fund capital expenditures, potential strategic acquisitions, investments in existing and future data centers and bitcoin mining projects, general corporate purposes, and potentially stock buybacks ^[2].

Mixed Production Results

Riot reported producing 428 bitcoins in November, representing a 14 percent decline from the same month the previous year ^[2]. The company attributed the decrease to higher network difficulty and planned curtailments related to power strategy. Total bitcoin holdings reached 19,368 at November's end, up 70 percent year-over-year but only four bitcoins higher than October ^[2].

The miner sold 383 bitcoins during November, generating $37 million in net proceeds at an average realized price of $96,560, down from $114,970 the previous month ^[2]. The company currently owns approximately 1.7 gigawatts of power capacity across two large-scale Texas facilities ^[2].

Riot stock has risen 24 percent year-to-date and 21 percent over the past 12 months despite recent volatility ^[2]. J.P. Morgan recently forecasted 45 percent upside for the shares through 2026, citing expectations for a potential 600-megawatt colocation deal at the company's Corsicana site by the end of next year ^[2].