Russian Bitcoin miners fear new mining registry could lead to security breaches

Russian Bitcoin miners are concerned about a government mandate requiring wallet addresses to be included in a national registry.

Russian lawmaker Anton Gorelkin highlighted these concerns in a Feb. 7 Telegram post, warning that geopolitical rivals could exploit leaked addresses. He described such a scenario as a major threat, as sanctions could severely impact mining operations.

According to him:

“Russian miners are concerned about the safety of some highly sensitive data that is collected by the state as part of the new regulation (for example, crypto wallet numbers)…It is obvious that a leak of information about wallets could be a big gift to our geopolitical opponents.”

Despite these worries, Russia’s tax authority told Gorelkin that the registry is housed in a secure internal system with strict access controls. Officials claim the risk of leaks is minimal, but skepticism remains as cybersecurity experts often stress that no system is entirely immune to breaches.

Gorelkin said:

“The Federal Tax Service assured me that information about mined cryptocurrency and identifier addresses is stored in a separate internal secure system, and access to it is seriously limited even within the agency, and it is almost impossible to obtain it from the outside.”

These issues emerge as Bitcoin mining has become a profitable business in Russia, with demand for industrial mining equipment in Russia surging threefold in 2024.

However, authorities have also ramped up efforts to collect information on these miners, and they are currently pushing to introduce a nationwide registry for crypto-mining equipment. This move would make registration compulsory for all mining activities, adding another layer of government scrutiny.

Russian sanctions

Russian miners’ fear of sanctions is well-founded as Western nations, including the US, have imposed heavy restrictions on Russia’s economy, cutting off access to traditional financial networks. These measures have hit key industries such as energy, trade, and technology.

Last month, the US Treasury Department introduced a new wave of sanctions aimed at reducing Russia’s energy revenues. The sanctions will block two active liquefied natural gas projects, a large Russian oil project, and third-country entities supporting Russia’s energy exports.