Law enforcement and other authorities in Dagestan have closed down two illegal crypto farms, confiscating more than 1,500 mining machines. Government agencies in the republic, considered one of Russia’s capitals of underground coin minting, carry out regular raids against such facilities.
Cryptocurrency miners in Dagestan accused of ‘illegal entrepreneurship’
Officers from Dagestan’s Interior Ministry and Federal Security Service discovered a large cryptocurrency mining farm in the capital of the Russian republic, Makhachkala, Tass news agency reported, citing the ministry. Law enforcement seized 1,476 devices producing digital currencies, details a press release.
The department added that the owners of the illegal facility have been also providing services to other miners including installing mining rigs, connecting them to the power grid and providing security. Experts are now working to establish the market value of the confiscated mining equipment as well as the amount of consumed electricity.
Law enforcement officials who raided the crypto farm further noted that they were collecting evidence to charge the operators under Part 2 of Art. 171 of the Criminal Code of the Russian Federation, “Illegal entrepreneurship”, and part 2 of Art. 165, “Causing property damage by deceit or breach of trust”.
In the past few years, Dagestan has become a hotspot for illegal and home crypto mining, along with Russian regions such as Krasnoyarsk Krai and Irkutsk Oblast that have maintained low electricity rates. As a result, they have suffered blackouts due to breakdowns, especially in residential areas where the electrical networks are not designed to handle the excessive loads.
In another case, local power grid operator and distributor Rosseti Severniy Kavkaz recently found 95 cryptocurrency minting rigs at a facility of the republic’s water supply utility, Мahachkala Vodokanal. The equipment was installed in a metal container at the Vuzovskoe Ozero pumping station.
The crypto farm had a power capacity of 260 kW and its illegal electricity consumption exceeded 4.5 million kWh, worth more than 26 million rubles (over $400,000). According to an announcement by Rosseti, the farm was set up by a resident of the Dagestan capital who worked in collusion with employees of the water utility.
Moscow authorities have taken steps to regulate crypto mining as a business activity for which Russia has certain advantages, such as its cheap energy sources and favorable climatic conditions. State Duma lawmakers are currently considering a new bill designed to achieve this. Meanwhile, in an effort to curb mining with household electricity, Russia’s anti-monopoly agency has suggested introducing higher electricity tariffs for those mining from home.
