Governor of Russian Bitcoin Mining Hub Calls for Year-round Prohibition

The energy challenges facing the Russian Bitcoin mining hub of Irkutsk are escalating, prompting the region’s Governor to propose a “year-round ban” on cryptocurrency mining.

Irkutsk Governor Igor Kobzev made these remarks during a session of the Legislative Assembly of the Irkutsk Region, which was broadcast on the region’s VK channel.

The Governor indicated that he would request Moscow to extend its winter mining prohibition in the southern part of the region.

However, not all members of Kobzev’s administration appear to support such a ban. Some express concerns that it could permanently drive mining companies out of the region.

Authorities in Russian Bitcoin Mining Hub Split on Ban Proposal

Numerous industrial players remain in the area, despite a recent order mandating them to shut down their operations during the winter months.

A notable historic building in Irkutsk, Russia. (Source: Fanzuga [CC BY-SA 3.0])

The ban took effect on January 1. Kobzev stated that the policy has already shown results, claiming it has “freed up about 300 MW of power capacity.”

Nonetheless, he noted that electricity shortages remain critical in the Angara region. He called for a halt to mining “in power-deficient areas” until new housing and state construction projects are completed.

However, Kobzev acknowledged that not everyone within the Irkutsk administration agrees with this approach.

Prior to the surge in Bitcoin mining in Russia, the region struggled to attract investors. Mining has revitalized the local economy.

With Moscow planning to implement cryptocurrency mining taxes later this year, forcing miners out of the region could prove to be an expensive decision.

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“We understand that the restrictions in the southern part of the region have elicited a mixed response. We recognize that there are opponents to further restrictions. However, we are confident that these measures are necessary. They will ensure the sustainable development of the region.”

Irkutsk Governor Igor Kobzev

Kobzev expressed his “confidence that we will move forward together.” He stated: “We will achieve a year-round ban on mining in power-deficient areas of the Irkutsk region until 2031.”

The River Angara in Russia. (Source: Octagon [CC BY 3.0])

North Exempt from Ban

Crypto miners continue to operate in Northern Irkutsk, and Kobzev appeared inclined to allow them to persist.

During the same meeting, he initiated the formation of a “commission to determine the extent to which the new federal regulations” would “facilitate an increase in tax revenues from miners’ activities in the north.”

This commission, he added, would present its findings “at the federal level,” with discussions regarding tax rates still ongoing in Moscow.

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Attractive Package for Miners

Irkutsk, located in Siberia, offers miners an appealing array of incentives: low real estate prices and rental costs, affordable energy expenses, and notoriously long winters.

However, Irkutsk’s reputation as a Bitcoin mining destination has also attracted numerous “gray” miners.

Many of these, according to Siberian energy companies, utilize illegal connections to the grid to evade detection by authorities.

The regional ban decree is set to last until 2031, but – for now – will permit miners to restart their operations in the spring of this year.

If Irkutsk’s Governor succeeds in his efforts, numerous other regions appear poised to compete to become Russia’s next Bitcoin mining hub.

The market share of the most popular Bitcoin mining pools over the past seven days. (Source: Blockchain.com)

These include the Komi Republic, which has begun work on an ambitious project to establish 15 new mining data centers.

Additionally, Rosseti, the state-owned power grid company, announced a plan this month to incentivize idle power facilities and installations not operating at full capacity to collaborate with crypto miners.

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