Russia: Illegal Crypto Mining Crackdown Intensifies as Officials Seize 238 Rigs

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked…

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Last updated:

September 2, 2024 23:00 EDT

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Russia’s illegal crypto mining crackdown continues in its unofficial Bitcoin (BTC) mining capital, with authorities confiscating 238 rigs from a community ostensibly dedicated to gardening.

The state media outlet TASS reported that the Investigative Committee of the Russian Federation for the Irkutsk Region raided a “summer cottage village” settlement in Priangarye.

Russia’s Illegal Crypto Mining Problem?

Officers said they seized “238 units of mining equipment.” They also claimed that the illegal miners had caused “damages worth over 68 million rubles [$758,000].”

The Committee said the mining rigs were “in the possession of” residents of the Angarsky Bereg gardening partnership.

The partnership is a non-profit organization supposedly comprising of agriculturalists working in rural areas.

Irkutsk Region (Oblast) is located in Southeastern Siberia. In recent years, it has grown into the de facto center of the Russian crypto mining sector.

This is due largely to its famously low energy rates, as well as its low winter temperatures.

However, in recent months, miners have been accused of overloading power grids, causing widespread disruption.

Power companies say that illegal miners, who connect to the grid using makeshift equipment, are mainly to blame.

They also accuse many individuals of using subsidized electricity intended for residential use to power their rigs.

The committee said it had launched a “criminal case” against the miners, charging them with fraud-related offenses.

Officers said the miners “paid for electricity at a discounted rate” intended “for household needs.” The committee said it had handed the case to the local prosecutor’s office.

The Birth of a Russian BTC Mining Hub

TASS says energy professionals think that crypto mining “has been widely carried out in Irkutsk since 2019.”

They claimed that the rise of Irkutsk as a mining destination was largely “due to a ban on cryptocurrency mining in China” and “the lowest electricity tariffs for the population in the country.”

Officials said that most miners “are illegal,” adding that they typically “install equipment in houses, apartments, garages, summer cottages, and balconies.”

As of September 1, industrial crypto mining is now legal in Russia as the nation seeks a way to circumvent US and EU-led sanctions.

However, miners must register their operations with a central regulator.

They may also be obliged to pay higher electricity rates. And provinces now have the power to temporarily force miners to shut off their rigs when their grids are overloaded.

In July, Irkutsk authorities seized 500 rigs from a similar agricultural community, with prosecutors pressing charges against another suspected illegal miner back in May.

Experts say that at least 90% of Russian crypto miners focus their efforts on Bitcoin.