Russia cracks down on illegal crypto mining as Rosseti reports $14M in losses

Russian authorities have conducted a raid on illegal crypto mining after its national power supplier, Rosseti, announced losses worth $14 million in 2024 due to unauthorized electricity consumption across multiple regions. The North Caucasus Grid alone accounted for 600 million rubles ($6.6 million).

Other affected areas include Novosibirsk and the Volga regions, which lost a total of $5.7 million.

Authorities identified one of the largest illegal mining operations in Novosibirsk and confiscated 3,200 mining rigs. That single operation was responsible for a financial loss worth $2.2 million.

The crackdown led to the discovery of over 130 cases of unauthorized grid connection linked to crypto mining. These cases have been turned over to the legal authorities, initiating over 40 criminal cases. The culprits could face legal action under Russia’s criminal code.

Rosseti warns that illegal mining could lead to severe damage to the country’s power infrastructure

While castigating those who have tapped electricity illegally, Rosseti, the power company, cautioned the public about the effects of illegal mining. The company stated that unauthorized electricity use is likely to overload the grid, lower voltage levels, and damage electrical equipment. 

Such disruptions have untold consequences on both the company’s infrastructure and regular users.

Bitcoin mining, which has a high carbon footprint, is usually carried out in high-tech data centers, which places huge demands on the electricity grid due to the many computers required to process and verify transactions before they are recorded on the blockchain.

Demand for industrial mining tools is on the rise in Russia

By utilizing the excess supply, Rosseti plans to consolidate its financial position while mitigating the challenges of illegal mining. The company and law enforcement are jointly cracking down on illegal mining at a time when the demand for crypto-mining equipment in some parts of Russia is growing.

The demand for industrial mining rigs tripled in 2024 compared to 2023. Although the rise was linked to Russia’s progressive regulatory framework that offered clarity on the mining industry, the aspect of illegal mining as a driver for the equipment can’t be overruled.

Therefore, authorities are keenly tracking unauthorized mining operations and are making substantive efforts to enforce the nationwide registry of mining equipment.