Russia Is Cracking Down On Crypto Miners Minting In Residential Areas

Russian authorities are now prosecuting miners who extract cryptocurrencies using subsidized electricity for the population, according to a top Energy Ministry official. Power utilities are tracking their increased consumption and trying to pay them at commercial rates.

Amateur crypto miners in Russia under pressure despite lack of regulation for home mining

Electricity distribution companies in Russia have begun to identify improvised mining farms in residential buildings because of the increased amount of energy consumed and the high load on the grid at substations, Pavel Snickers, deputy minister of energy, told the Russian press.

Government officer told that the authorities are going after “illegal miners”. While crypto mining is not yet regulated and such activities are not yet explicitly banned, utilities can prove in courts that these consumers are not using electricity for domestic needs.

Lawyers interviewed by the newspaper said that in at least 10 cases so far, suppliers have been able to cover the difference between preferential tariffs for the general population to domestic miners and the higher rates businesses are required to pay.

When an increase in electricity consumption triggers their suspicions, utilities initially send an inspector to investigate and issue a new invoice based on the price of electricity used for commercial purposes, Snickers explained. Eventually, they could try to prove their claims in court.

Irkutskenergosbyt, the electricity distributor in the energy-rich region of Irkutsk, which has been dubbed the “mining capital of Russia,” was among the first to tackle the issue in 2021. According to a report in August this year, crypto miners in the Siberian region, where rates start at only $0.01 per kWh in rural districts, have already paid 100 million rubles in fines (about $1.7 million at the time).

Home Crypto Mining Blamed For Problems With Power Supply In Some Areas

Pavel Snikkars revealed last week that Russia is expected to see a major increase in the share of cryptocurrency miners in the total consumption of electricity. He also emphasized that domestic mining is a major problem in some areas where infrastructure is not able to handle the load and energy companies are taking measures to ensure reliable supply to other users.

According to Oleg Ogienko, director of government relations at Bitriver, one of Russia’s largest mining farm operators, Russian crypto mining requires approximately 1.7 GW of electricity, of which 50 – 60% is used in the industrial segment of the market.

Mining is one of the crypto-related activities that the Russian government is looking to legalize and regulate in order for the industry to take advantage of the country’s competitive advantages such as cheap energy resources and cold climatic conditions.

In November, a group of lawmakers filed a bill with the lower house of parliament designed to regulate the minting of digital currencies such as bitcoin through an amendment to the country’s existing law “On Digital Financial Assets”. The legislation was backed by the Bank of Russia and is expected to be adopted by the end of the year.

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