Amid new legislation for crypto mining in Russia, local authorities have uncovered illegal crypto mining farms in the southern Republic of Dagestan. The regional prime minister has urged law enforcement to increase their efforts to tackle these unlawful mining operations as the region grapples with electricity consumption issues.
Underground Crypto Mining Centers Busted
On Tuesday, Reuters reported that Dagestan authorities are calling for stronger actions against illegal crypto mining centers in the region. Abdulmuslim Abdulmuslimov, Dagestan’s prime minister, has asked law enforcement to pay more attention to the evolving methods miners use to operate. During a meeting on preparations for energy, housing, and utilities facilities for winter, the regional leader revealed new hiding methods of unregistered mining farms, noting that several mining centers have been discovered underground.
“The owners of illegal cryptocurrency mining installations are coming up with new methods of circumventing the law – they install mining farms underground,” said Abdulmuslimov.
Authorities showcased a video of a makeshift underground cavern in the Sergokalinsky district. It depicted a narrow square entry at ground level, easily disguised, with a ladder leading to the cave. Upon descending, authorities discovered over 15 mining machines with dozens of fans cooling the computers. Abdulmuslimov pointed out that this was just one of several underground crypto mining farms in the region. Moreover, he mentioned that miners also use “mobile installations” for their farms, allowing them to move more easily.
Russia’s New Mining Era
As reported by Bitcoinist, crypto mining was recently legalized in Russia. In August, Russia’s President Vladimir Putin signed a new law to give the sector a legal status within the country, aiming to be at the forefront of innovation and combat illegal operations. The new legislation will go into effect on November 1, 2024, permitting registered companies and individuals to operate legally. Under this law, crypto miners and mining companies will have exclusive rights to mine in the country.
However, individuals who do not exceed the energy consumption limits set by the Russian government will have the right to mine without registering. It’s worth noting that the crackdown on crypto mining farms has been an ongoing issue in the Republic of Dagestan. A report by The Insider detailed that police raids on mining centers have become more frequent in the region since late 2023. The investigation claims that Dagestan “is most likely first in all of Russia when it comes to the number of detected electricity thefts” used for crypto mining, and authorities consider mining operations responsible for electrical problems due to their high consumption.
Ultimately, Dagestan’s prime minister ordered law enforcement to toughen the measures, alleging that the illegal mining centers have caused electrical outages, including a recent fire at a substation that left several districts without power over a week ago.
Conclusion
The discovery of illegal crypto mining farms in Dagestan highlights the ongoing challenges and complexities in regulating the rapidly evolving cryptocurrency sector. As Russia moves towards legalizing and regulating crypto mining, the authorities’ efforts in Dagestan serve as a critical step in ensuring the stability of the region’s power grid and the legal integrity of the mining industry. The upcoming legislation promises a new era for crypto mining in Russia, balancing innovation and regulation to foster a more transparent and efficient market.
