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Last week, Russian cryptocurrency mining initiatives faced a challenge as law enforcement shut down two significant illegal data centers.
Authorities reported that over 400 cryptocurrency mining rigs were taken offline during operations in Siberia and the Dagestan republic.
Russian Crypto Mining Remains in Regulatory ‘Grey Zone’
The power provider AO RES, based in Novosibirsk, disclosed (via Kommersant) that police conducted a raid on an abandoned boiler house located in a village near Iskitim, within the Novosibirsk Oblast.
During the operation, police uncovered an “illegal connection” to the electrical grid. Officers noted the presence of “special racks several meters tall” inside the facility.
These racks contained “over 100 functioning ASIC devices,” specifically “designed for cryptocurrency mining.”
A view of the town of Iskitim in Novosibirsk Oblast, Russia.
Law enforcement and energy specialists also reported finding “unpacked mining equipment in the area.” The power company stated:
“The damage inflicted on the electrical grid by the illegal miners’ activities amounted to several million rubles [1 ruble = $0.011].”
AO RES indicated that officers confiscated so-called “grey” mining equipment from the site. Nonetheless, the activity of cryptocurrency mining itself is categorized by Russian authorities as “grey.”
US energy data agency to track crypto mining power use https://t.co/jjR03ggi76 pic.twitter.com/OflreesRE6
— Reuters (@Reuters) January 31, 2024
Despite domestic miners asserting that their combined capacity ranks second only to that of the USA, mining lacks legal recognition in Russia.
Major companies like BitRiver have been urging Moscow for years to “accelerate” the legalization of their sector.
However, until legislators enact a law that acknowledges mining as a form of “entrepreneurship,” the entire Russian cryptocurrency landscape will remain in a state of “grey” uncertainty.
Officials from the power company mentioned they are contemplating initiating a criminal case against the alleged leaders of the Iskitim operation.
If found guilty of breach of trust and theft, the miners could face imprisonment for up to five years, according to media reports.
Dagestan Experiencing Increase in Crypto Mining Activities
In Dagestan, the Russian Ministry of Internal Affairs announced that officials in the North Caucasus Federal District “uncovered an illegal mining farm situated on the grounds of an abandoned brick factory.”
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Police executed a raid on the “farm” located in Dagestan’s Kizilyurt District, following “reports of unlawful electricity usage.”
Specialists from the energy network company and “police operatives” examined the site. They subsequently “identified tampering with the transformer booth’s electricity meter software.” The ministry stated:
“The transformer’s power supply was directed into a hangar that contained over 300 cryptocurrency mining devices on metal racks.”
A unit used to cool an illegal crypto mining rig setup, in footage released by the Russian Ministry of Internal Affairs.
The ministry reported that it disconnected “300 devices” equipped with “video cards for cryptocurrency mining.”
Officials stated they discovered “components and software utilized for mining coins” in a room within the complex.
Banks of illegal crypto mining rigs, in footage released by the Russian Ministry of Internal Affairs.
Officers claimed that the “farm” operators installed the cryptocurrency mining equipment “between July and September 2023.”
Experts from the energy firm indicated that the miners had “bypassed electricity meters” and connected to a local power line.
Police representatives stated that the miners were accountable for a “preliminary estimate” of damages totaling nearly $18,700. The ministry noted that its investigation into the farm is currently “ongoing.”
Last month, the state-owned power company Dagenergo requested that operators of “mining farms” in Dagestan shut down their rigs due to concerns over potential blackouts. The provider urged:
“We kindly ask you to consider your loved ones. Please turn off mining [equipment]. [Mining rigs] can overload the electrical network and lead to technological disruptions.”
Russian tycoon Alexey Mordashov wins $500 million claim against Vietnam Oil & Gas Group for a power plant that wasn’t completed https://t.co/GXyrME1BEc
— Bloomberg Markets (@markets) February 12, 2024
Could Russia Emerge as a Global Leader in Crypto Mining?
In January, Russian industrial miners expressed their dissatisfaction with government proposals to increase electricity tariffs.
Officials from the energy ministry indicated that they want miners to pay a higher rate for electricity, believing this would deter miners from establishing operations in regions with already strained grids.
However, industry leaders argue that this action would impede the advancement of the Russian cryptocurrency mining sector at a crucial moment when it could potentially become a global leader.
The post Two Russian Crypto Mining Centers Shut Down, 400+ Rigs Taken Offline appeared first on Cryptonews.
