The Russian energy giant Rosseti Group has reported significant financial losses due to illegal cryptocurrency mining operations, commonly known as “black” mining.
According to an official statement from the company, unauthorized connections to power grids in 2024 alone have caused damages exceeding 1.3 billion rubles (approximately $14 million).
Regions Worst Affected
The most severe losses were recorded in several key regions like Rosseti North Caucasus with over 600 million rubles in damages, Rosseti Novosibirsk with around 400 million rubles and Rosseti Center and Volga Region with approximately 120 million rubles
Illegal mining activities have not only led to financial losses but also posed significant risks to energy infrastructure. According to Rosseti, these unregulated operations overload power grids, often leading to low voltage, damage to electrical equipment, and power outages for local communities.
Authorities Crack Down on Illegal Mining
In response, Russian authorities have intensified their efforts to shut down unauthorized mining farms. So far in 2024, 130 cases of illegal electricity connections and unaccounted consumption have been identified and stopped.
Law enforcement agencies have launched over 40 criminal investigations, with suspects facing serious charges under the Criminal Code of the Russian Federation, which could result in imprisonment.
One of the most striking cases occurred in Novosibirsk, where officials discovered more than 3,200 mining devices operating without authorization.
The electricity theft was described as “industrial-scale”, with damages estimated at 197 million rubles ($2.1 million). The owner of this illegal mining operation has since been detained.
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Mining Operations in Unusual Locations
Rosseti revealed that illegal mining operations are being conducted in a variety of locations, from small rented plots to underground parking lots in apartment buildings.
For example, in Karachay-Cherkessia, authorities uncovered nearly 200 mining systems inside a warehouse that had consumed over 12,000 kWh of electricity, causing disruptions in power supply for nearby homes.
One of the most unconventional setups was found near Nizhny Novgorod, where miners set up operations in a regular container on rented land, attempting to evade detection.
New Regulations for Crypto Mining in Russia
The Russian government has been tightening its grip on the cryptocurrency mining industry to curb illegal activities and regulate energy consumption.
In November 2023, authorities banned seasonal mining in several regions, including the North Caucasus and Zabaikalsky region in Siberia.
These restrictions will remain in place annually from November 15 to March 15 until 2031 to reduce strain on the power grid during winter months.
Additionally, earlier this month, Russia’s Ministry of Energy announced plans to establish a mandatory registry for cryptocurrency mining equipment. This initiative aims to track domestic mining operations and improve energy resource management.
Another significant regulatory measure introduced by the government requires crypto miners to report their earnings by the 20th of each month. The goal is to increase transparency in the sector, ensuring that mining activities are monitored and controlled more effectively.
The crackdown on illegal cryptocurrency mining in Russia highlights the ongoing conflict between miners and energy providers. While cryptocurrency mining remains a lucrative business, unauthorized operations continue to drain the country’s power resources and disrupt local communities.