The Russian government is looking to approve the process of mining cryptocurrencies using APG – Associated Petroleum Gas.
Oil and gas firms in the country are looking to generate power from their oil rigs to operate crypto mining farms. Vasiliy Shpak, the deputy minister of the Ministry of Industry and Trade, presented this new proposal to the Bank of Russia and also the Ministry of Digitalization. Based on the report received by Kommersant, the proposal was filed on the 7th of September, and the officials are asked to submit their perspectives in the proposal.
Speaking with Kommersant, The Ministry of Industry and Trade said the proposal was initiated by reputable participants in the market, namely the oil and gas firms.
In the proposal, they planned to employ associated gas from their oil rigs to power data centres nearby for mining cryptocurrencies. This kind of flared natural gas is a byproduct of the oil extraction process. For the oil-drilling firms, it is a liability, and when flared, it releases greenhouse gases into the atmosphere. Because of the cost of setting an adequate gas infrastructure, the gas is often allowed to waste.
In the letter written by Vasiliy Shpak, he also suggested that the country should start looking into the manufacturing of devices that turns flare gas into useful energy. Though the government has done all it could to reduce the amount of gas flared, there are quite some struggles in doing so because of the lack of proper infrastructure.
In the proposal submitted, the Deputy Minister of the Ministry of Industry and Trade noted that employing natural gas to mine cryptocurrencies will increase the efficiency of the usage of natural gas in thermal generation.
A very close source to the Ministry of Industry and Trade mentioned that the proposal submitted to the Ministry of Digitalization came from one of the biggest oil firms in Russia. The company has already established a small mining farm that used flare gas but is looking to scale up the mining project. Because the mining business has some legal reaction, the company is concerned about the negative reaction it could incur from the central bank, which is why it turned to the ministry of industry to smith out the risks with the regulator.
Currently, the only oil company in Russia to have launched a mining firm is the third-largest oil firm in the country, Gazprom Neft. Its associate, Vekus has mined 1.8 BTC in just a month of operation last year, as reported by Forklog. Though, Gazprom Neft declined the claim.
The response of the Authority
The Central Bank of Russia, responding to the proposal, said that discussion is currently ongoing on the different approaches to the regulation of digital assets.
The law has introduced the concept of digital currency, but the procedure of its circulation in the country will be regulated by other separate laws.