Russian Crypto Miners in Irkutsk Get Fined About $1.7 Million

Local authorities in the Russian region of Irkutsk have placed a heavy financial fine on crypto miners for the unauthorized use of power to mine digital currencies. Power providers have equally filed a lot of lawsuits according to Russian sources. Irkutsk is an energy-rich region within the Russian Federation.

The Profitability of Mining to Russians

Mining Cryptocurrencies have been a profitable venture for a lot of companies in Russian regions with high energy generation. The entire industrial setup provides an alternative means of income for regular Russians, especially with sanctions from Western countries.

Russia has a relatively low distribution of power for industrial purposes. Many crypto miners, thus, exploited the cheaper power provided for household consumption, and some even stole the power for use.

Local authorities in Irkutsk have decided to clamp down on unauthorized miners. Those miners have caused the power usage to increase in both industrial and residential areas, and it reportedly leads to numerous outages and infrastructure breakdowns in the region. Irkutsk has an abundance of energy resources and rates are as low as $0.01/kWh.

Power distribution companies in the area have filed about 400 lawsuits this year alone. They sued miners who exploited the subsidized electricity that was meant for domestic consumption. It also has those who connected their mining wares to grids illegally.

The courts have now placed a fine of nearly 100 million Russian Rubles (approximately $1.7 million) on illegal power users. A report released in January has it that the Irkutsk Energosbyt facility is asking for 63 million Russian Rubles (approximately $800,000) from unauthorized miners.

The Crackdown

Over 9000 mining equipment and units were disconnected from the Baikalsk power plant and Ust-Ordynsky during raids recently conducted. This was reported by the Federal Press while quoting the region’s Prosecutions Office. The raid shut down many underground mining centers and it will prevent any accident from occurring at heat-generating facilities.

Mining is one of the crypto activities that still waits to be comprehensively addressed through regulation. A lot of officials in the Russian capital, Moscow, say it ought to be taken as industrial action and taxed as one. They cite the advantage Russia has over many other countries such as cheap power costs and a cool atmosphere.

Russia’s Ministry of Energy asked that mining be urgently legalized in March. The Ministry also suggested that there should be a regional power quota for miners.

Mining at home is a trend that the Russian government wants to curb. A source at the Ministry of Finance said the government sees no point in banning crypto mining.