Rail Boss ‘Stole Electricity from Russian Railways Network to Mine Crypto’

Power chiefs stole electricity from the state-owned Russian Railways to operate private crypto mining rigs, prosecutors in St. Petersburg have claimed.

The Russian news agency Interfax reported on September 17 that a court in the city has ordered the arrest the head of a Russian Railways (RZD) power department, along with his deputy.

The Smolninsky District Court ruled that Sergei Kuznetsov, the head of the RZD’s St Petersburg-Finlyandsky Station Electricity Supply Department, and his deputy Nikolai Baltser, should remain in custody until November 15.

The station is one of the biggest and most important rail transport hubs in the country.

Prosecutors say the duo stole nearly 1 billion rubles (over $12 million) worth of power from their employer to power crypto mining rigs.

The duo has been charged with abuse of power-related offenses. But police think they did not act alone. Investigators said an as-yet “unidentified mastermind” paid Kuznetsov and Baltzer.

Officers say the mastermind used this aid to “tap Russian Railways facility resources for energy-intensive mining.”

This mastermind, police think, belongs to an organized criminal group that also includes other RZD employees.

Police said they found crypto mining rigs “illegally installed at the Gromovo and Lugovaya substations.” Both substations are connected to the RZD’s central power grid.

The rigs operated undetected from September 16, 2024, until they were discovered on September 16 this year, officers added.

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Prosecutors say they believe that arrestees were “aware” that the rigs would require an “uncontrolled consumption of electrical energy.”

The suspects also reportedly understood that their actions were a violation of RDZ’s property rights. They also knew that this would “harm the legitimate interests of their employer,” prosecutors added.

Prosecution officials reported that Kuznetsov “immediately began cooperating” with the pretrial investigation upon his arrest.

However, both defendants said they objected to being taken into custody. Kuznetsov and Baltzer both said they had no intention of trying to flee ahead of their trials.

Earlier this month, Russian electronics retailers reported that demand for crypto mining hardware in St. Petersburg and the surrounding region is now the third highest in the country.

Evidence appears to suggest that some miners are leaving traditional Bitcoin mining hotspots in Southern Siberia and the North Caucasus in favor of larger urban areas.

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