CRYPTOACTIVE MINING FACILITIES IN ANDORRA

The Regulation on the requirements for crypto-asset mining installations about their impact on the electricity system was approved today.

It approves the requirements for authorisation and registration in the new administrative register of crypto-asset mining facilities, which is integrated into the National Energy Register (REN). The electricity system operator will issue a report on each application based on criteria that depend on the power used, and any connection to the mining network will be prohibited until it is registered in the Register and has the required authorisation. Private installations, installations with less than 10 computers and installations based on Proof of Stake mining are excluded from the Regulation..

 

  •  What is a miner and what does a miner do?

Crypto asset mining is the performance of an activity within a blockchain that aims to receive a fractional reward in the form of a newly created crypto value (token). It is a process by which transactions on a network are validated and aggregated and then added to a ledger known as the Blockchain. Through this activity, new crypto assets can be issued and maintained. When new blocks are added to the chain, a reward is obtained.

The miner is the DLT node dedicated to mining, i.e., anyone who makes their computational resources available to a crypto network to validate transactions and/or in the extraction of new units.

 

  • What types of mining facilities are there?

The Regulation on the requirements for crypto-asset mining installations in terms of their impact on the electricity system differentiates between:

  • Private installations: located in premises or homes, whose main activity is not the mining of crypto assets, and which are connected to the electricity grid via the meter of the main activity, with a contracted power of 25kW or less.
  • Private installations: the rest of the installations that carry out a crypto asset mining activity.

 

  • What is the regulation of mining facilities in Andorra?

Mining activity has been regulated in Andorra since the approval, on 20 July 2022, of Law 24/2022, of 30 June, on the digital representation of assets using cryptography and distributed ledger and Blockchain technology.

This activity is subject to prior authorisation by the Government, following a mandatory report by the electricity system operator. Individuals or legal entities wishing to carry out this activity must register in the "Administrative register of crypto asset mining facilities" to be enabled by the supervisor, to submit the application for authorisation.

Today, 24 August 2022, the Regulation on the requirements for cryptocurrency mining facilities in terms of their impact on the electricity system is approved. Thus, the administrative register of cryptocurrency mining facilities is integrated into the National Energy Register (REN).

The electricity system operator must issue a report on each application to be processed by the Energy and Climate Change Office. The report will be based on criteria that depend on the power of use, i.e., depending on the power:

  • Greater than 25 kW and less than or equal to 250 kW.
  • Greater than 250 kW and less than or equal to 1,000 kW
  • Above 1,000 kW.

It is prohibited to connect a crypto-asset mining installation to the electricity grid until it is registered in the Administrative Register of Installations and has the required authorisation.
Private installations, installations with less than 10 computers and installations based on Proof of Stake mining are excluded. It is surprising that installations of less than 10 computers with a contracted power of more than 25 kW are excluded from the scope of application of both the Law and the Regulation, and the deadlines for obtaining authorisation for crypto-asset mining installations have not been established.

 

  • What are the sanctions?

Failure to comply with any technical, administrative or security requirement may lead to the suspension or revocation of the authorisation of the activity. The penalties applied are those set out in Law 24/2022, of 30 June, on the digital representation of assets using cryptography and distributed ledger and Blockchain technology: minor, serious or very serious infringements, with fines ranging from €9,999 to €1,000,000.

 

Our team can help you with any questions you may have regarding the application of the Law and the Regulation in your mining project, as well as for the expansion or modification of your activity. If you have any questions or need clarification, please do not hesitate to contact us.

 

Sincerelly,

A professional team at your disposal.