Russia Cracking Down on Crypto Miners Minting in Residential Areas

Russian authorities are now prosecuting miners extracting cryptocurrency using subsidized electricity for the population, according to a top official from the energy ministry. Power utilities are detecting their increased consumption and trying to make them pay at commercial rates.

Electricity distribution companies in Russia have started to identify improvised mining farms in residential buildings by the rising volume of energy consumption and higher loads on the grid at substations, Deputy Ministry of Energy Pavel Snikkars revealed to the Russian press.

The government official told the daily Izvestia that authorities are going after the “illegal miners.” While crypto mining is yet to be regulated and such activities are not explicitly prohibited right now, utilities can prove in courts that these consumers are not using the electricity for domestic needs.

Lawyers interviewed by the newspaper said that in at least 10 cases so far, the suppliers have been able to oblige home miners to cover the difference between the preferential tariffs for the general population and the higher rates that businesses are required to pay.

When increased power consumption triggers their suspicions, the utilities would initially send an inspector to check and issue a new invoice based on the price of electricity used for commercial purposes, Snikkars explained. Eventually, they could try to prove their claims in court.

Irkutskenergosbyt, the electricity distributer in the energy-rich region of Irkutsk dubbed “the mining capital of Russia,” was among the first to deal with the issue in 2021. According to a report in August of this year, crypto miners in the Siberian oblast, where rates start at just $0.01 per kWh in rural districts, have already paid 100 million rubles in fines (almost $1.7 million at the time).

Pavel Snikkars unveiled last week that Russia expects a sizable increase in the share of cryptocurrency miners in its total consumption of electrical power. He also emphasized that at-home mining is a big problem in certain areas where the infrastructure is not capable of handling the loads and energy companies have been taking measures to ensure reliable supplies for other users.

Russian crypto mining needs about 1.7 GW of electricity, 50 – 60% of which is utilized in the industrial segment of the market, according to Oleg Ogienko, director for government relations at Bitriver, one of Russia’s largest mining farm operators.

Mining is one of the crypto-related activities that the Russian government wants to legalize and regulate in order to take advantage of the country’s competitive advantages for the industry such as cheap energy resources and cool climate conditions.

In November, a group of lawmakers filed a bill with the lower house of parliament designed to regulate the minting of digital currencies like bitcoin through amendments to the country’s existing law “On Digital Financial Assets.” The legislation was backed by the Bank of Russia and expectations are that it will be adopted by the end of the year.

Do you think that home crypto mining will remain an additional source of income for ordinary Russians in the future? Tell us in the comments section below.