Illegal cryptocurrency mining in Russia faces crackdown: centers shut down, equipment seized

The Russian cryptocurrency mining industry has faced a severe crackdown by authorities over the past week, resulting in the closure of two major data centers and the seizure of more than 400 mining machines. The action, which was concentrated in Siberia and the Republic of Dagestan, revealed the complex regulatory situation facing cryptocurrency mining in Russia, where the industry still exists in a legal "gray area."

In an operation in the city of Iskitim in the Novosibirsk region, police raided an abandoned boiler room where they found illegal electrical connections for powering more than 100 ASIC devices designed for cryptocurrency mining, which ran on racks several meters high.

Energy company AO RES, which reported the incident, estimated that the damage to the grid caused by illegal miners amounted to millions of rubles. The seizure of “grey” equipment shows the authorities’ willingness to combat the proliferation of illegal mining activities in the country, despite the lack of legal clarity surrounding the activity.

Meanwhile, in Dagestan, an investigation by the Russian Interior Ministry revealed a large mining “farm” operating illegally in an abandoned brick factory. The operation was triggered by a report of illegal electricity use, resulting in 300 mining machines equipped with graphics cards being disconnected. The investigation is still ongoing, but authorities have indicated that criminal charges may be brought against the perpetrators, who could face up to five years in prison.

The situation highlights the growing challenges Russia faces in regulating its cryptocurrency mining industry. Despite being one of the largest global players in the field, the activity remains in regulatory limbo due to a lack of specific legislation. Large mining companies such as BitRiver have been pushing for clear legal definitions to better legalize and structure the industry. Until the Russian government passes legislation to classify cryptocurrency mining as a form of entrepreneurship, the future of the industry will remain uncertain.