Russian Authorities Seize 500 Crypto Mining Rigs in Raid on BTC Mining Hotspot

Bitcoin Mining Russia
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Tim Alper
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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Russian authorities say they have seized 500 crypto mining rigs in a raid on the Bitcoin (BTC) mining hotspot of Irkutsk.

Per the news agency TASS, a group of crypto miners caused over $2.3 million of “damage.”

Russian Authorities Readying BTC Mining Crackdown?

The Investigative Committee of the Russian Federation for the Irkutsk Region said on July 19 that it found the mining equipment in properties belonging to dacha and summer cottage “community members.”

The committee said the rigs belonged to “residents of the Uyutnoye dacha community and the Molodezhnoye cottage village in the Irkutsk Region.”

Investigators said the residents used power “from electrical networks supplying the citizens” of the Irkutsk Oblast.

Although the miners did not steal their electricity from the grid, they allegedly “paid for electricity consumption at the preferential rate for households.”

A traditional Russian dacha.
A traditional Russian dacha. (Source: Bodykiller [CC BY-SA 3.0])

This indicates a major shift in the Russian crypto mining sector. Until recently, Russian authorities targeted miners stealing power using illegal connections.

Crypto mining still has no legal status in Russia, despite recent efforts to legalize and tax industrial mining firms.

However, power providers have complained that their grids are under pressure in many parts of the country. This list of areas includes Irkutsk.

Last week, President Vladimir Putin addressed the issue, claiming that regions such as Irkutsk needed the authority to clamp down on crypto miners.

A Russian Crypto Mining Boom

Irkutsk is one of the biggest cities in Siberia. Its citizens enjoy some of the lowest electricity rates in the nation.

Miners have traditionally been attracted to the region for its famously cold winters, ideal for reducing cooling costs.

Putin suggested that Irkutsk and other regions could respond by banning crypto mining in certain areas.

The President added that, per government calculations, crypto mining accounts for 1.5% of the nation’s total electricity usage.

He also called on his government to fast-track crypto regulations. Although he did not address the matter of a “ban” directly, most commentators in Russian media outlets think that Putin favors legalizing the sector in some form.

The miners are likely to face “fraud”-related charges after “entering into” residential rate “contracts” for power grid connection.

TASS quoted energy industry experts as saying that crypto mining “in the Irkutsk region” has “been widely practiced since 2019.”

Russia’s Crypto Mining ‘Capital’

The news agency stated that the Irkutsk Oblast “has become the ‘capital’ of Russia’s crypto mining sector.”

The Irkutsk Oblast on a map of Russia.
The Irkutsk Oblast on a map of Russia. (Source: TUBS [CC BY-SA 3.0])

This has brought many industrial players to the area. These firms pay a higher (industrial) rate for their energy, but as yet do not pay taxes on their earnings.

However, TASS explained that, per its sources:

“Most miners [in Irkutsk] are illegal. They install their equipment in houses, apartments, garages, dachas, and balconies. And pay for the energy they consume at residential rates. These rates are lower than the rates for businesses.”

Previous government incentives have included a proposal to give electricity firms the power to “hunt” and fine private miners.

Russian industrial players say that granting their sector legal status will allow them to inject money into the domestic economy.

Experts think that about 90% of all Russian miners focus their efforts on Bitcoin, with smaller numbers mining altcoins like Litecoin (LTC).

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