Crypto-Asset Mining Facilities in Andorra

Today, the Regulation regarding the requirements for crypto-asset mining facilities in relation to their impact on the electrical system is approved.

This approves the authorization and registration requirements in the new Administrative Registry of Crypto-Asset Mining Facilities, which is integrated into the National Energy Registry (REN). The electric system operator will issue a report on each application, based on criteria depending on the power usage, and any connection to the mining network will be prohibited unless it is registered and has the mandatory authorization. Private facilities, installations with fewer than 10 computers, and installations based on Proof of Stake are excluded from the Regulation.

What is a miner and what does it do?

Crypto-asset mining is the activity carried out within a blockchain whose objective is to receive a fractional reward in the form of a newly created crypto-asset (token).
It is a process through which transactions on a network are validated and grouped before being added to a ledger known as the blockchain. Through this activity, new crypto-assets can be issued and the system’s operation guaranteed. When new blocks are added to the chain, a reward is obtained.

The miner is the DLT node dedicated to mining, that is, any person who provides their computational resources to a crypto network to validate transactions and/or extract new units.

What types of mining facilities exist?

The Regulation regarding the requirements for crypto-asset mining facilities in relation to their impact on the electrical system distinguishes between:

• Private facilities: located in premises or homes, whose main activity is not crypto-asset mining and which connect to the electrical grid through the main activity’s meter, with a contracted power of 25 kW or less.
• Crypto-asset mining facilities: all other facilities that carry out crypto-asset mining activities.

What is the regulation for mining facilities in Andorra?

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

This activity is subject to prior authorization from the Government, after the mandatory report from the electric system operator. Individuals or legal entities wishing to carry out this activity must register in the “Administrative Registry of Crypto-Asset Mining Facilities” enabled by the supervisor, in order to submit the authorization application.

Today, August 24, 2022, the Regulation regarding the requirements for crypto-asset mining facilities in relation to their impact on the electrical system is approved. Thus, the Administrative Registry of Crypto-Asset Mining Facilities is integrated into the National Energy Registry (REN).

The electric system operator must issue a report on each application, which must be processed at the Office of Energy and Climate Change. The report will be based on criteria depending on the power usage, according to the following categories:

• Power greater than 25 kW and less than or equal to 250 kW.
• Power greater than 250 kW and less than or equal to 1,000 kW.
• Power greater than 1,000 kW.

Connection to the electrical grid of a crypto-asset mining facility is prohibited unless it is registered in the Administrative Registry of Facilities and has the mandatory authorization.

Private facilities, installations with fewer than 10 computers, and installations based on Proof of Stake are excluded.
It is surprising that facilities with fewer than 10 computers but with contracted power above 25 kW are excluded from both the Law and the Regulation, and that no deadlines have been set for obtaining authorization for crypto-asset mining installations.

What are the sanctions?

Failure to comply with any technical, administrative, or safety requirement may lead to suspension or revocation of the activity authorization. Applicable sanctions are those established in Law 24/2022, of June 30, on the digital representation of assets through the use of cryptography and distributed ledger technology and blockchain: minor, serious, or very serious infractions, with fines ranging from €9,999 to €1,000,000.

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

Sincerely,
A professional team at your disposal.