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Russian authorities crack down on illegal crypto mining operations

TL;DR

  • Russian police shut down two big illegal crypto mining centers, seizing over 400 rigs.
  • In Siberia, officers found hidden ASIC devices causing millions in grid damage.
  • Despite industry growth, crypto mining in Russia remains in legal limbo, facing crackdowns and regulatory uncertainty.

Russian law enforcement authorities have dealt a significant blow to illegal cryptocurrency mining operations in recent raids conducted in Siberia and the republic of Dagestan. The crackdown resulted in two large-scale illegal data centers closing, with over 400 crypto mining rigs taken offline.

Illegal mining operations uncovered in Siberia

In Novosibirsk Oblast, police raided a disused boiler house in the suburban village of Iskitim, uncovering an elaborate setup for illegal cryptocurrency mining. The officers discovered over 100 operational ASIC devices concealed within special racks, along with unpacked mining equipment. These miners had illegally tapped into the power grid, causing substantial damage to millions of rubles.

Legal limbo surrounding crypto mining in Russia

Despite Russia’s burgeoning crypto mining industry, the activity remains in a legal grey area. The absence of legislation recognizing mining as a legitimate form of entrepreneurship has left the sector in limbo. Industrial giants such as BitRiver have long advocated for legalization, emphasizing the sector’s potential contribution to the country’s economy.

Authorities are considering launching criminal cases against the individuals behind the illegal operations in Iskitim. If convicted, the perpetrators could face up to five years in jail for breach of trust and theft. This crackdown underscores the Russian government’s firm stance against unauthorized cryptocurrency mining activities.

In the republic of Dagestan, law enforcement officials dismantled an illegal mining farm operating within an abandoned brick factory in the Kizilyurt District. The raid followed reports of unauthorized electricity consumption, discovering more than 300 cryptocurrency mining devices. The operators had bypassed electricity meters and connected to the local power line, resulting in substantial damages.

Ongoing investigation and blackout concerns

The investigation into the illegal mining farm in Dagestan is ongoing, with authorities assessing the full extent of the damages caused by the unauthorized operations. Last month, amidst concerns of potential blackouts, state-run power firm Dagenergo urged mining farm operators in Dagestan to power down their rigs. The plea highlighted the risks of overloading the electrical network and causing technological disruptions.

In January, the Russian government proposed raising electricity tariffs for industrial miners to alleviate the strain on overloaded grids. While energy ministry officials argue that higher tariffs would deter miners from setting up operations in areas with strained infrastructure, industry leaders fear that such measures could stifle the growth of the country’s crypto-mining sector.

As Russian authorities continue to crack down on illegal cryptocurrency mining operations, the debate over the legalization and regulation of the industry intensifies. While industry players advocate for clearer legal frameworks and favorable policies to support growth, law enforcement remains vigilant in enforcing existing regulations to curb unauthorized activities.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Benson Mawira

Benson is a blockchain reporter who has delved into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), etc.His area of expertise is the cryptocurrency markets, fundamental and technical analysis.With his insightful coverage of everything in Financial Technologies, Benson has garnered a global readership.

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