The Federal Customs Service (FCS) in Russia is investigating allegations of unpaid customs fees for over 6,000 Bitcoin miners imported into the country.
Cryptocurrency mining is the process of mining electronic currencies using modern equipment and special programs that allow you to gradually accumulate Bitcoins and other digital coins. The relevance of cryptocurrency mining is as high as ever in Russia since the country is still working on regulation for the sector.
The Russian government has taken a strict stance on cryptocurrencies since the arrival of Bitcoin in 2009, and as such many laws surrounding mining are still murky.
Now it seems that some groups are attempting to exploit this grey area by importing Bitcoin miners illegally and evading taxation.
The FCS tightens control
The Russian FCS has demanded that subordinate customs authorities tighten control over the movement of equipment for cryptocurrency mining.
Due to the fact that the equipment for cryptocurrency mining operates on the basis of certain cryptographic algorithms, it is subject to restrictions that apply to the import of goods with encryption and cryptography functions.
Mining equipment imported by individuals as goods for personal use, including shipment by international mail, must be declared to customs officials.
Also, according to information from the Office of Trade Restrictions, Currency, and Export Controls, cryptocurrency mining equipment is subject to two technical regulations regarding “the safety of low-voltage equipment” and the “electromagnetic compatibility of technical equipment”.
A conformity assessment of such equipment is carried out by customs officials to ensure it adheres to these regulations.
The main manufacturer of Bitcoin miners and ASIC devices is the Chinese company Bitmain. The production of graphics cards for mining is carried out by the American companies Nvidia and AMD.
As such, these miners need to comply with certain requirements for foreign devices and must be declared and checked.
Russian police investigate
Most ASIC miners arrive in Russia using illegal import schemes. More than 70% of miners enter the country through these schemes as a way of evading tax.
The FCS has launched a criminal investigation into the case of an alleged exporter of Bitcoin mining equipment called the Far Eastern Commercial and Industrial Company.
The company is accused of not paying customs duties on 6,000 Bitmain ASIC miners amounting to around $1.2 million.
The Bitmain ASIC miners in question are touted as energy-saving Bitcoin miners with high hash rates.
It is alleged that the company also falsified documents which showed fake pricing.
The representative of Bitmain in Russia, Julia Fetisova, suspects that the root of the problem is large resellers who are buying huge batches of ASIC miners from Bitmain at discounted prices, evading any import taxes, and then reselling the miners in Russia with quick delivery and no import fees.
Unfortunately, it is more profitable for illicit companies to work in this way rather than wait until their delivery passes through customs. As such, these schemes are becoming more common.
Conclusion
The cryptocurrency boom and the growing popularity of mining have led customs officials in Russia to decide that all mining equipment needs to be controlled.
This is in line with the requirements of the Eurasian Economic Union regarding the import and export of goods with encryption and cryptography functions.
However, Bitcoin miner import schemes are now present in Russia as unscrupulous companies and individuals aim to evade customs taxation.
With the FCS now aware and clamping down on such schemes though, it remains to be seen whether customs officials can fully eradicate the issue.
Read more about Bitcoin mining with Coin Rivet here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.