Allegations of Corruption in Russian Railways
In an alarming case of alleged corruption, two executives from Russian Railways are said to have illegally diverted electricity to fuel private cryptocurrency mining operations. According to prosecutors in St. Petersburg, Sergei Kuznetsov, who oversees the electric supply for the St. Petersburg-Finlyandsky Station, alongside his deputy Nikolai Baltser, face severe charges following a recent court ruling.
Legal Proceedings and Charges
The Smolninsky District Court has ordered both individuals to remain in custody until at least mid-November as investigations continue. These officials are accused of stealing nearly 1 billion rubles, equivalent to over $12 million, in electricity to run their unauthorized mining setups. The station they manage is crucial to Russia’s rail transport system, further complicating the implications of their alleged misconduct.
Investigation Details
Prosecutors allege that Kuznetsov and Baltser did not operate independently; investigators have indicated the existence of an unknown mastermind who financed this operation. This individual, believed to have connections to a criminal network involving other employees of Russian Railways, reportedly orchestrated the tapping into the railway’s power resources for the energy-intensive cryptocurrency mining ventures.
Authorities discovered the mining rigs clandestinely installed at two substations—Gromovo and Lugovaya—which are part of the RZD’s central power grid. Remarkably, these operations persisted unnoticed from September 16, 2024, until their recent exposure this month.
Implications and Reactions
During the legal proceedings, it has been alleged that both men were fully aware of the excessive energy consumption and the breach of property rights related to their employer, thus potentially harming Russian Railways’ legitimate interests. Notably, Kuznetsov has begun cooperating with investigators following his arrest, although both he and Baltser protested their detention, asserting they had no plans to flee the jurisdiction.
Context of Cryptocurrency Mining in Russia
This incident comes at a time when demand for cryptocurrency mining gadgets in St. Petersburg has reached unprecedented levels, making it the third largest market for such equipment in Russia. Reports indicate that many miners are migrating from the traditional hubs of Southern Siberia and the North Caucasus towards urban landscapes, seeking more favorable conditions for their operations.
