Russia to Ban Crypto Mining in Some Regions Amid Intensified Crackdown

Russia to Ban Crypto Mining in Some Regions Amid Intensified Crackdown

Russia's Energy Ministry has announced plans to ban cryptocurrency mining in certain regions as part of an ongoing effort to curb illegal operations particularly in Siberia. Yevgeny Grabchak the Deputy Minister of Energy stated that these state-level bans are likely to be implemented and may remain in effect until 2030.

Reasons for the Ban

According to Grabchak the decision to impose the ban stems from a significant shortage of electricity in the affected regions. Although he did not specify which areas would be targeted the emphasis seems to be on traditional mining hotspots. This announcement comes just days before a new crypto mining law is set to be enacted which is Russia's second piece of legislation focusing on cryptocurrency mining. This law will empower regional authorities to issue temporary bans on mining activities.

Grabchak also noted that while President Vladimir Putin had previously endorsed the development of the crypto mining sector he has called for regions to have the authority to shut down mining operations in response to local power shortages. The forthcoming proposal will shift the power to enforce local mining bans from regional governors to the central government.

Local Crackdowns Intensify

The crackdown on illegal miners continues as evidenced by recent actions taken by law enforcement in Irkutsk a region known as the unofficial Bitcoin mining capital of Russia. Reports indicate that authorities are actively targeting unauthorized crypto mining operations within the area. For instance Kommersant reported the detention of an individual in Malinovka a village in the Cheremkhovskiy District for allegedly engaging in illegal cryptocurrency mining.

Local police reported that the individual had illegally connected to the electrical grid at a private residence. The Irkutsk Electric Grid Company had previously cut off power to the residence due to unpaid energy bills. According to police the resident had reconnected to the grid without proper authorization which is a violation of local regulations. In a raid conducted in early September officers discovered 25 cryptocurrency mining rigs along with related equipment on the premises.

Criminal Proceedings Initiated

Following the discovery law enforcement has initiated criminal proceedings against the individual under Article 165 of the Russian Criminal Code which pertains to causing property damage by deception or abuse of trust. The focus on illegal mining operations highlights the broader challenges the country faces regarding energy consumption and the sustainability of the mining industry.

Irkutsk has long been a hub for Bitcoin miners but in recent months many industrial mining firms have expressed intentions to relocate their data centers away from Siberia and the Far East due to increasing regulatory pressures and power supply constraints. A similar crackdown on unauthorized mining operations appears to be gaining momentum in Novosibirsk the largest city in Siberia and its administrative center.