Russian Energy Companies Set to Target Private Cryptocurrency Miners

Russian energy companies are gearing up to “track down” private cryptocurrency miners and impose restrictions on individuals mining cryptoassets at home, according to a report published on May 12.

The news outlet Izvestia reported that the Russian Government Expert Council is set to submit new proposals related to mining to the Cabinet.

Legislators aim to consolidate these proposed measures into a new set of cryptocurrency regulations. These regulations also seek to legitimize industrial crypto mining while prohibiting most domestic exchanges.

Russian Government Crypto Chief: Mining Regulation Is Our Priority

The chairman of the Russian government’s crypto working group asserts that regulating Bitcoin (BTC) mining has become a priority for Moscow.#CryptoNews #newshttps://t.co/Gqdg4vwnZB

— Cryptonews.com (@cryptonews) April 9, 2024

Crypto Miners: Russian Energy Firms to ‘Hunt’ Offenders

The media outlet indicated that the council will deliver written proposals, which its reporters have already reviewed, to the Cabinet on May 16.

The documents suggest employing electricity meter technology to detect suspected miners. Data analysts will “compare reported readings with actual electricity consumption” utilizing “remote monitoring solutions.”

The document further outlines how energy companies will penalize “illegal” miners. It proposes permitting power firms to impose “higher rates” on home-based offenders.

These rates are generally designated for “industrial enterprises.”

US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the developer of a Russian Drone, OKO Design Bureau. What happens next?#OFAC #USA #Russiohttps://t.co/7Bs0KuoPw1

— Cryptonews.com (@cryptonews) May 2, 2024

Energy Companies to Gain More Powers

Dmitry Tortev, from the Federal Antimonopoly Service of Russia, informed the media outlet that this initiative would enable energy providers to operate without needing to navigate the legal system. He stated:

“Currently, electricity suppliers must present evidence of crypto mining-related infractions in court. This consumes valuable time and resources for these companies. However, if a unified system for penalties is established at the federal level, it will expedite and enhance the effort against [illegal crypto mining].”

Crypto mining continues to be highly popular in Russia. However, since the activity lacks legal status, mining coins is neither explicitly illegal nor legal.

Private mining is also not prohibited, and at this time, Russian energy companies can only intervene if they suspect individuals are illegally drawing power from local grids.

A Russian home crypto miner shows off his equipment. (Source: ProMining/YouTube)

Systems Overloaded, Say Providers

The documents reportedly express concerns that the Russian energy system is “overloaded” in various regions.

The authors indicate that this is causing “interruptions in the supply of electricity to consumers.” The document reportedly asserts:

“In certain areas, there has been a notable rise in electrical energy consumption, [often] attributed to an increase in mining activities. This has resulted in […] local shortages in the south-eastern part of […] Siberia.”

The authors of the documents also mentioned that shortages have been observed in “the Irkutsk-Cheremkhovo district of the Irkutsk region, the southern part of Buryatia, and specific areas of the Trans-Baikal region.”

These locations are recognized as crypto mining hotspots, favored for their low electricity rates and cold climates.

Irkutsk, in particular, has emerged as a center for both legal and illegal mining in recent years, leading to a somewhat complex relationship with the mining industry.

An engineer working in a Russian industrial crypto mining data center. (Source: Nastoyashee Vremya Syuzhetiy/YouTube)

Izvestia also cited Deputy Minister of Energy Pavel Snikkars, who stated that energy tariffs for miners should “increase in a manner that encourages them to relocate from energy-deficient regions.”

The same ministry has previously proposed measures aimed at alleviating the burden on overloaded networks.

One suggestion included requiring industrial miners to power down their operations for specific periods throughout the year.

While these proposals have been met with dissatisfaction by many miners, most industrial miners are urging Moscow to “accelerate” the legalization of their sector.

Bitcoin mining has been ongoing for a considerable time, but is becoming less profitable due to the design. It’s intriguing to observe major Bitcoin mining companies diversifying their investments into AI. | Bitcoin miners get into AI to survive halving https://t.co/U3YA8TS9iv

— Scott C. Lemon (@humancell) April 22, 2024

Although this would necessitate them to start paying taxes on their profits, the largest firms are seeking legal clarity from Moscow before making further investments in data centers.

Sergei Bezdelov, the head of the Industrial Mining Association, remarked:

“We have a favorable view towards any initiatives aimed at fostering the growth of industrial mining in this country. We would welcome inspections by power providers if that would be beneficial. This will assist in legitimizing this sector in Russia.”

The post Russian Energy Firms Prepare to ‘Hunt’ Private Crypto Miners appeared first on Cryptonews.