The ban on crypto mining in several Siberian regions that took effect on November 1 has caught the attention of a Siberian local government official who was recently arrested for illegal crypto mining. The Russian government recently banned the activity in several areas to prevent power shortages during winter.
According to a Telegram post from the spokesman of the Novosibirsk Oblast’s Prosecution Service, the unnamed lawmaker from the Krivodanovsky Rural Council in the Novosibirsk Oblast region had connected electricity illegally connected his mining rigs to a substation using clamps and a nearby electrical pole and mined an unnamed coin from June 2022 to June 2023.
Official Faces Up To 5 Years in Jail for Illegal Crypto Mining
The prosecutor’s office stated that the lawmaker would be charged under the Russian Criminal Code for “causing property damage by deception on an especially large scale.” and connecting his rigs to the power grid “without obtaining a permit from JSC RES, the state-run Novosibirsk-based power provider” using an “unauthorized connection” with “power receiving devices.” The authorities confiscated crypto-mining hardware worth over $11,300 that the man allegedly used for his illegal crypto-mining operations in his garage. If convicted on the charge of stealing $61,350 worth of electricity, “the Criminal Code of the Russian Federation provides for a punishment of imprisonment for up to five years.”
Russia Affecting Crypto Mining Ban
Russia recently implemented a ban on crypto mining within the Siberian region and parts of the territory it annexed from Ukraine. The ban on crypto mining would specifically be enforced during winter in areas such as Lake Baikal, which has been the local hub for crypto mining, thanks to the low cost of electricity in those areas. Moreover, a lot of power infrastructure in the annexed areas of Ukraine was destroyed by Russian forces in 2022, leading to unprecedented power shortages. Official estimates show that crypto miners in Russia consume at least 16 billion kilowatt-hours annually. This adds up to over 1.5% of the country’s electricity consumption, leading to shortages, especially in areas facing harsh climates.
Crypto Miners Have Come Under Serious Scrutiny Globally
The problem is made worse by illegal crypto mining in areas such as the southern republic of Dagestan, where authorities are calling for tougher measures against crypto miners. According to local officials in those areas, Illegal crypto mining was the main source of electricity outages as miners sought to evade the law by building illegal mining installations underground.
Crypto miners have come under serious scrutiny globally in recent years, with several countries calling for a ban on crypto mining as their operations guzzle a lot of electricity around the clock.
In the Dagestan region, the local prime minster categorically stated that his government would pay closer attention to illegal crypto mining following a fire in a substation in the capital as a result of a spike in consumption said to have been caused by crypto mining.
The PM stated that ‘The owners of illegal cryptocurrency mining installations are coming up with new methods of ‘circumventing’ the law – they install mining farms underground.” The Dagestan local government went on to release footage that showed investigators inspecting a makeshift underground illegal crypto mining installation, showing dozens of fans to cool the computers.
Conclusion
As Russia intensifies its war against illegal crypto mining, reports say that the government plans to implement a total ban in a number of areas before the end of 2024. According to local news outlet Kommersant, a full ban on crypto mining would be imposed from December to March 15, 2025, in areas like “Karachay-Cherkessia, Kabardino-Balkaria, North Ossetia-Alania, Ingushetia, Chechnya, Dagestan, the Kherson and Zaporizhzhia regions and the Donetsk and Lugansk People’s Republics.”
The Russian authorities have also planned partial bans in several other towns and districts of the Irkutsk region, Buryatia, and Trans-Baikal Territory. This was after Russia’s parliament amended the country’s crypto-mining laws to allow local governments to target anyone suspected of carrying out illegal crypto-mining activities.
The new changes distinguish between individual and enterprise-grade mining, with businesses being required to register and pay taxes besides adhering to energy consumption limits.
