Illegal Cryptocurrency Mining in Russia
Russia is reportedly losing approximately 10 billion rubles, which is equivalent to about $120 million annually, due to illegal cryptocurrency mining activities, according to Peter Fedorov, an associate professor affiliated with the National Research University of Electronic Technology (MIET). Fedorov’s insights come amid increasing concerns about the scale of unregistered crypto operations that circumvent the national budget, making it challenging to accurately assess the total financial impact. His findings are derived from publicly accessible data and evaluations of resource consumption patterns.
Impact on Local Infrastructure
A significant example highlighted by Fedorov involves the Irkutsk region, where authorities recently identified 7,600 illegal mining sites over a one-year period. He emphasized that these unauthorized operations not only deplete state tax revenues but also pose risks to local electricity infrastructure, leading to periodic outages in residential neighborhoods.
“Areas with already limited electricity supply are usually the most affected; when consumption surpasses available capacity, overloads occur, resulting in power outages,”
Fedorov explained.
Government Crackdown
The situation has spurred Russian authorities to intensify their crackdown on illegal cryptocurrency mining, with notable actions in June targeting individuals and businesses misusing governmental resources for personal gain. A particularly striking case involved a power company executive discovered to be running an unlicensed Bitcoin mining operation that exploited stolen electricity, culminating in the confiscation of Bitcoin valued at over $88,000. Investigators accused the former executive of using his knowledge of the power grid to reroute electricity illicitly, allowing him to operate mining equipment from home without authorization.
Consequences of Unauthorized Mining
It’s reported that he illegally accessed electricity from his employer’s power facility, resulting in an estimated theft equivalent to over 3.5 million rubles, or roughly $44,000 in stolen energy. The escalating issue of unauthorized crypto mining has raised alarms about the need for stricter regulations and improved monitoring of energy consumption across different regions in Russia. Experts caution that failure to regulate these operations could further jeopardize the country’s power supply systems and hinder legitimate advancements within the blockchain sector.
