Russian authorities have identified more than 8,000 miners making cryptocurrencies outside the law at Irkutsk’s Siberian crypto mining hotspot.
The region banned the activities of some of its territory, addressing growing energy deficits and grid failures, and denounced the boom in both legal and illegal mining.
Russia counts thousands of underground crypto farms in Irkutsk
Officials at Irkutsk Oblast in Russia have identified thousands of suspected locations of illegal crypto mining facilities, but the actual figures may exceed current estimates.
“There are over 8,000 illegal mining points in the area, with the maximum number of them registered in the Irkutsky district (1,700).
The cities of Angersk and Sherekhov are also in the “red zone,” the distribution company added. Also, business news agency Prime quoted it to highlight that the true number of these so-called “gray” miners is much higher.
Casings designed to reduce the increased demand for “noise boxes” or the noise emitted by mining hardware are another indication of the scale of these “shadow operations,” says Irkutskenergosbyt.
Residential miners use them when installing mine rigs in their homes, basements and garages to avoid attracting neighbors’ attention and their complaints.
Advertisements selling such improvisation gear can be seen across Russian social media networks and online marketplaces, the utility company noted.
Many of these combined structures, assembled from plywood and mineral wool, are unable to provide adequate healthy insulation, increasing the risk of fire.
Irkutsk is at the heart of crackdown on illegal mining in Russia
Russia has recognized cryptocurrency mining in 2024 as a legal business activity. Since November, businesses and individual entrepreneurs have been free to embed as long as they register with the Federal Tax Services (FNS).
Individuals using less than 6,000 kWh of power per month are not required to register. These are labelled “Grey” miners. Because they remain primarily under the radar and are often responsible for increasing power consumption in residential areas.
Another group, “Black” miners, are people who have taken stolen power by illegally connecting to distribution networks. Russian grid operator Rosseti has been cornering them both with electricity usage and internet traffic, with the help of the electric company’s companies.
Moscow initially welcomed the expansion of the industry with the view that Russia’s competitive advantage would be brought not only to business revenue but also to budget receipts, in terms of its cheap and abundant energy resources.
However, the concentration of mining companies from all categories also led to electricity shortages in many areas, prompting Moscow’s federal government to support temporary and sometimes permanent restrictions on mining.
Russian President Vladimir Putin himself justified the measure by highlighting the need for a balanced approach to exploiting Russian wealth in a forum discussing development initiatives last month.
Around 12 Russian regions in every corner of the vast country, from the Far East to the Ukrainian territory annexed with the North Caucasus, have already banned activity until 2031.
Measures to curb mining have also been introduced in the southern part of Irkutsk Oblast, known as Russia’s “mining capital.” The first season ban during the winter was eventually upgraded to an annual ban.
Russian lawmakers are currently considering legislation that would prevent mining in data centres. Sponsors say this will save you the computing power available in other areas, such as the development of artificial intelligence applications.
Meanwhile, operators of such infrastructures have recently been required to report on mining activities within the facility to FNS and other related agencies.
Russia is also preparing to tighten penalties for breaching the ban on mining and the creation of illegal coins. Among the proposed measures is to allow authorities to remotely disconnect crypto farms from the grid at peak consumption times.