Two Russian Crypto Mining Centers Shut Down, 400+ Rigs Offline

13 February 2024

in Mining

Reading Time: 5 mins read

Last updated:

February 12, 2024 22:00 EST
| 3 min read

Russian crypto mining efforts suffered a setback last week, with police closing two large, illegal data centers.

In total, officers said they took over 400 crypto mining rigs offline in raids in Siberia and the republic of Dagestan.

Russian Crypto Mining Still in Regulatory ‘Grey Zone’

The Novosibirsk-based power provider AO RES (via Kommersant) reported that police officers raided a disused boiler house in a village in the suburbs of Iskitim, in the Novosibirsk Oblast.

Police discovered an “illegal connection” to the power grid. Officers said they found “special racks several meters high” inside the building.

These racks housed “more than 100 operational ASIC devices,” with devices that were “designed for mining cryptocurrencies.”

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Iskitim, Novosibirsk Oblast, Russia. (Source: Fed) — A view of the town of Iskitim in Novosibirsk Oblast, Russia.

Officers and power experts also said they found “unpacked mining equipment in the room.” The power firm said:

[crypto-donation-box]

“The damage the illegal miners caused to the electrical grid from their activities amounted to several million rubles [1 ruble = $0.011].”

And AO RES said officers seized so-called “grey” mining equipment from the scene. However, the very activity of crypto mining falls into what Russian authorities call “grey” activity.

US energy data agency to track crypto mining power use https://t.co/jjR03ggi76 pic.twitter.com/OflreesRE6

— Reuters (@Reuters) January 31, 2024

Mining still has no legal status in Russia, despite the fact that domestic miners say their collective capacity is now second only to that of the USA.

Industrial giants like BitRiver have urged Moscow to “hurry up” and “legalize” their industry for years.

However, until lawmakers pass a bill that recognizes mining as a form of “entrepreneurship,” the entire Russian crypto sector will remain in “grey” limbo.

Power firm officials said they were considering launching a criminal case against the alleged masterminds of the Iskitim operation.

If convicted of breach of trust and theft, the miners could be jailed for up to five years, media outlets claim.

Dagestan Witnessing Rise in Crypto Mining Activities

In Dagestan, the Russian Ministry of Internal Affairs reported, ministry officials in the North Caucasus Federal District “discovered an illegal mining farm on the territory of an abandoned brick factory.”

Police officers raided the “farm” in Dagestan’s Kizilyurt District of Dagestan, following “reports of illegal electricity consumption.”

Energy network company specialists and “police operatives” inspected the site. They then “identified interference with the transformer booth’s electricity meter software.” The ministry said:

“The transformer’s power supply fed into a hangar that housed more than 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 said that it disconnected “300 devices” with “video cards for cryptocurrency mining.”

Officials aid they found “components and software used to mine coins” in a room in the complex.

Banks of illegal crypto mining rigs, in footage released by the Russian Ministry of Internal Affairs.

The officers claimed that the “farm” masterminds installed the crypto mining equipment “between July and September 2023.”

Energy firm experts said the miners had “bypassed electricity meters” and connected to a local power line.

Police spokespeople said the miners were responsible for a “preliminary sum” of damages worth almost $18,700. The ministry said its investigation into the farm was currently “ongoing.”

Last month, the state-run power firm Dagenergo asked the operators of “mining farms” in Dagestan to power down their rigs amid blackout fears. The provider pleaded:

“We kindly ask you to think about your loved ones. Please turn off mining [equipment]. [Mining rigs] can overload the electrical network and cause technological disruption.”

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 Become a Crypto Mining Global Leader?

Also in January, Russian industrial miners expressed their displeasure at government plans to raise their electricity tariffs.

Energy ministry officials say they want miners to pay a higher rate for electricity. They think this will help discourage miners from setting up shop in areas with already-overloaded grids.

However, industry leaders say this move would halt the growth of the Russian crypto mining industry at the point where it could become a global leader.

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