In a striking revelation, a power company in Siberia has been penalized for unlawfully leasing state land designated for public utilities to an illegal cryptocurrency mining operation. This comes just ahead of an anticipated crackdown on crypto mining in Russia set for next year.
Details of the Fine
The Irkutsk Region Prosecutor-General’s Office announced that the company was fined over 330,000 rubles (approximately $3,000) for this misuse of land. In addition to the monetary penalty, local prosecutors will pursue further administrative action against the power provider.
The Appeal of Crypto Mining in Siberia
Siberia’s cool climate and low electricity prices have made it a hotspot for cryptocurrency mining. However, this surge in mining activity has raised concerns among residents, who often blame these operations for power outages and instability in the electrical grid, particularly during the harsh winter months.
Russia’s Complicated Crypto Landscape
Russia’s engagement with cryptocurrency is multifaceted. Last year, the country emerged as the second-largest Bitcoin miner globally, reportedly generating over $3 billion in Bitcoin in 2023. In response to this growth, the Russian government legalized crypto mining and allowed its use in international trade, leading to approximately $550 million in tax revenue.
Government Crackdown on Illegal Mining
Despite the potential financial benefits, illegal crypto mining poses significant challenges, particularly as it goes untaxed and contributes to regional power shortages. To address these issues, Russian authorities have announced a ban on crypto mining in ten regions for a duration of six years, along with seasonal restrictions during the coldest months. These measures aim to mitigate the impact of mining on the local power infrastructure.
The Persistence of Illegal Operations
In Irkutsk, illegal mining operations continue to flourish despite government efforts to shut them down. Authorities have confiscated hundreds of mining rigs in an attempt to deter these clandestine activities. In a stark warning last July, President Vladimir Putin linked power outages to illegal mining, noting that these operations consume nearly 1.5 percent of Russia’s total electricity supply—a figure that is on the rise.
Surprising Discovery
Amidst a landscape where illegal mining is often hidden from view, the discovery of an illegal operation on state-controlled land managed by a power utility was unexpected for officials. The specific power provider involved in this controversy has not been disclosed, leaving questions about which entity made the decision to lease land for illicit mining.
