string(31) "Mining market. Grays VS Whites."
21.02.2023

Mining market. Grays VS Whites.

The digital queen’s gambit 

The mining of cryptocurrency using computer technology is gradually approaching unambiguous interpretations in the legal field. New precedents are being set where mining is getting close to legal norms such as mineral mining and entrepreneurship. The field of digital economics has some problems in the law, and they continue to emerge, but the more we get, the faster it becomes safe.

Property rights are at the forefront and the possibility of registering rights to digitally mined gold is on the horizon.

Commodity sector move

The goal of such a legal justification is to bring mining to a certain regulation and standardization of mining. Not so long ago specialists from Oak Ridge Institute of Science organized a study where they compared the amount of energy consumed for the production of cryptocurrencies and metals such as aluminum, or platinum. 

This approach to digital currency will not lead to unambiguous legal interpretations, because precious metals are not so volatile, which means that the risks of crypto miners will not be correctly assessed by law. The difference between fiat and most cryptocurrencies is that they are inconceivable without a register of transaction blocks (blockchain), and therefore without people associated with it.

Debut in the field of innovation

In the modern world data flows are already outpacing legislation and policy.  That is why many crypto-friendly countries are introducing so-called “experimental legal regimes” for mining, also known as “regulatory sandboxes”. The main idea of this practice is that in a certain territory and for a limited period of time there are special rules that make it possible to develop goods and services in the areas of digital innovations. 

This is how the small Swiss city of Zug became known as the “Crypto Valley”, where the crypto projects “Ethereum Foundation”, “Crypto Valley Association”, “Bitcoin Suisse” and some others are currently based. Local authorities support the industry with tax incentives and favorable legislation.

The authorities of Montenegro have recently proposed an even more lenient approach. The country’s Securities and Exchange Commission has created a special legal regime where there are no special rules, regulations, or fees for the crypto business. During the reporting period (up to 3 years), the Montenegrin regulatory body studies the crypto startup better and decides on further licensing. In addition, the corporate tax rate for such organizations is one of the lowest in Europe – 9%.

Among  Arab countries, Bahrain stands out with its active cryptocurrency and mining settlement policy. The Central Bank of the country provides an opportunity for digital entrepreneurs to obtain a crypto license within the framework of the comprehensive rules contained in Volume 6 of the BCB Rules. In this way, the industry in the region was able to test and improve its innovative products in cooperation with the state bank, without being burdened by traditional regulatory requirements for commercial activities.

So far, the most objective scenario in the development of legal issues seems to be the scenario in which the regulatory authorities of states will come to recognize mining as an entrepreneurship in the field of the latest technologies. Only in this case, legal regulators will be set up correctly, taking into account risk factors, production costs (electricity use), and the unpredictability of the mining result. Mining in pools, by the way, appeared in order to reduce the impact of these factors. These rules of the game will make it possible to achieve the necessary loyalty toward miners who have suffered from electricity tariffs and gray hardware imports.

Loss of the “Grays”

After the introduction of restrictions on mining in China, the market was flooded with offers to sell cryptocurrency mining equipment. The problem was reflected in the neighboring country of the Republic of Kazakhstan, where local traders began to purchase and resell equipment of unknown origin using “gray” schemes. Against this background, a wave of inspections against unauthorized mining farms is spreading in the country. This is the reason why Kazakh lawyers work on registering the mining equipment on IE (individual entrepreneurship), or Ltd to make it work in the law field. In these cases, there is no approval because deals were made on “gray” marketplaces and remain illegal. Entrepreneur loses their existing legal protection and risk damaging their reputation with the equipment involved in fraud. 

“Whites” wins

“Uminers” provides equipment for cashless payment and does not use “gray schemes” in its activities. The range consists of video cards, mining equipment and components from China. Each item was officially imported into the territory of the Russian Federation. It has a customs declaration and paid duties for each product.

«You can be sure of the legal security of the transaction and the goods you purchase have a warranty and they are new. The package of documents includes all necessary closing accounting papers that give full confidence in the legally approved right to transfer ownership, moreover, it makes it legal to put equipment on the balance sheet of your company. We set the standard of service and the standards of legal purity of the transaction, to which the whole market will come and this will be another step towards resolving the issue of regulating the mining industry in Russia” – CFO Uminers RU Daniel Bondarev.

Endgame with equipment docs

For purchasing staff the company offers bank transfer payment through your personal account. In addition, the client gets a pack of documents which includes a copy of the state customs declaration for goods (customs declaration), a copy of the air waybill (Air Waibill), and even a copy of cargo insurance. All the logistics stages can be traced and legally proved. That’s the way it works in “Uminers”. 

“Uminers” has been an active participant in “Blockchain Life” since 2018 and can be considered a recognized expert in the industry. Over the years the company changed experience with the best international specialists and was awarded as the “Best Distributor of Mining Equipment”.

Conclusion

The US Federal Tax Service classifies income from mining as an entrepreneurial one and relies on a working legislative framework. Mining with emerging economies has yet to take their bold steps in this direction. It concerns even small private miners. If the average level of financial and legal literacy of miners becomes higher, then there will simply be no sense in “gray” schemes. Positive “Uminers” supply experience is another step on this hard path. “Uminers” has been experienced with the jurisdiction of Asia and the US since 2015 and absorbed a wealth of experience in ensuring the legal security of transactions.

Issues of the professional ethics of mining entrepreneurs remain open, as well as the disclosure to the legal field of such mining factors as production costs and risks. These factors are relevant to laws aimed at supporting experimental types of entrepreneurship, which should rightly include mining.

“Uminers” stands for the full legalization of the mining industry all over the world and for the creation of a professional crypto industry!

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