Hardware Worth $1.9 Million Stolen in Russia’s Crypto Mining Capital

Russian law enforcement is looking into the alleged theft of mining hardware valued at around $1.9 million. The powerful computing equipment disappeared from a crypto mining hotel in Irkutsk, the owners of which have been accused of large scale fraud.

Police in the Russian Irkutsk Oblast have launched an investigation of the operators of a mining hosting facility suspected of defrauding clients and stealing their expensive coin minting hardware, Tass news agency reported, quoting the region’s Main Directorate of the Interior Ministry.

In anticipation of quick earnings, the miners handed over their devices to those who were running the mining hotel, law enforcement officials explained. At some point, the latter stopped all payments to their customers and failed to return the expensive machines.

“A criminal case was initiated based on these facts under part 4 of article 159 of the Criminal Code of the Russian Federation (large scale fraud). Various material evidence, including computer equipment and documentation, was seized from their office,” a statement detailed.

The investigators have been able to establish that between November 2021 and May 2022, the suspects lured people who wanted to install their coin minting hardware in a mining hotel. They were offered renting and electricity prices that were far below the actual market rates.

At the same time, they urged the miners to hand over their equipment as quickly as possible, citing limited renting space. The owners of the mining rigs were not told where their devices were going to be located and only representatives of the hosting service had access to the mined coins.

Russian police are now looking for the fraudsters. Around 100 people have suffered losses from their actions. They gave the organizers of the mining hotel equipment valued at an estimated total of 100 million rubles, close to $1.9 million.

Offering some of the lowest electricity rates in the country, starting at just $0.01 per kWh in rural areas, the region of Irkutsk has seen a spike in crypto mining, with farms often installed in basements and garages and powered with subsidized household electricity.

Largely for this reason, the oblast has been dubbed the mining capital of Russia. Earlier this year, local electricity suppliers complained about a surge in power consumption in residential areas, which was blamed on home mining.

Russian media reports have revealed that planes with second-hand mining equipment from China, which cracked down on the industry in May 2021, have continued to arrive in the region this year, while cases of mining hardware theft have been on the rise. Russia is planning to legalize crypto mining which can benefit from its abundant energy resources and cool climate.

Do you expect more cases of fraud related to crypto mining in Russia in the future? Share your thoughts on the subject in the comments section below.