Power company hid illegal crypto mine that may have caused outages

Ahead of a major crackdown on illegal cryptocurrency mines in Russia next year, a power provider in Siberia has been fined for illegally leasing state land that's supposed to be used only for public utilities to an illegal mining operation.

In a social media post translated by Ars, the Irkutsk Region Prosecutor-General’s Office explained that the power provider was fined more than 330,000 rubles (about $3,000) for the improper land use. Local prosecutors will also pursue an administrative case against the power provider, the office said.

Crypto mining is popular in Siberia because of low operating costs, Crypto News noted, due to the cool temperatures and cheap power supply. But many in Siberia have blamed crypto miners for power outages and grid instability that can cause significant harms during winter months.

Russia's relationship with crypto mining is complicated. Last year, Russia became the world's second largest Bitcoin miner, the Moscow Times reported, mining more than $3 billion in bitcoin in 2023. Embracing cryptocurrency, the Russian government quickly moved to make crypto mining legal and approved its use in international trade, after reportedly generating approximately $550 million in tax revenue.

But Russia presumably gets no taxes on illegal crypto mining, and power outages can be costly for everyone in a region. So next year, Russia will ban crypto mining in 10 regions for six years and place seasonal restrictions that would disrupt some crypto mining operations during the coldest winter months in regions like Irkutsk, CoinTelegraph reported.

Illegal mining is still reportedly thriving in Irkutsk, though, despite the government's attempts to shut down secret farms. To deter any illegal crypto mining disrupting power grids last year, authorities seized hundreds of crypto mining rigs in Irkutsk, Crypto News reported.

In July, Russian president Vladimir Putin linked blackouts to illegal crypto mines, warning that crypto mining currently consumes "almost 1.5 percent of Russia’s total electricity consumption," but "the figure continues to go up," the Moscow Times reported. And in September, Reuters reported that illegal mines were literally going underground to avoid detection as Russia's crackdown continues.

Even though illegal mines are seemingly common in parts of Siberia and increasingly operating out of the public eye, finding an illegal mine hidden on state land controlled by an electrical utility was probably surprising to officials.

The power provider was not named in the announcement, and there are several in the region, so it's not currently clear which one made the controversial decision to lease state land to an illegal mining operation.