Electricity Consumption in Siberian Region Rises Fourfold Due to Crypto Mining

The electricity consumption in Russia's Irkutsk region rose fourfold in 2021 because of illegal mining, as the government ponders new crypto regulations, Russian news agency Tass reported on Wednesday.

Russian miners shrugged off the news, saying it will affect only illegal mining. The increased demand has been leading to power outages, Tass reported. The jump in the price of bitcoin last year along with China’s crackdown on crypto made miners flock to Irkutsk, Evgeny Vechkanov, director at the Irkutsk Electric Grid Co. told Tass.

In the first half of January, seven Boeing-737s loaded with mining rigs from China arrived in Irkutsk, said Oleg Prichko, CEO of Baikal Energy Co.

Irkutsk is “probably the biggest region with illegal mining. Some (miners) use residential tariffs, close to $0.01, so the government is chasing them," Denis Rusinovich, co-founder of CMG Cryptocurrency Mining Group and Maverick Group, told CoinDesk. An investigation was started in November, he said.

Data center businesses, including legal mines, have to pay around three times the residential price for electricity, Sergey Arestov, a co-founder of BitCluster, told CoinDesk. If you are engaged in industry, you must pay for electricity accordingly, he said.

Residents are even installing mining rigs in dog kennels, Andrey Zhbanov, head of the criminal investigation department in the ministry of internal affairs, told Tass.

The regulatory debate

While Irkutsk tracks illegal crypto mining, agencies at the federal level are discussing crypto regulation.

Last month, the Russian central bank proposed a ban on crypto mining, which the ministry of finance opposed five days later. President Vladimir Putin called for a consensus, signaling support for crypto mining.

Zhbanov said that a crypto mining ban is necessary, while Vechkanov thinks mining should be recognized by lawmakers as an entrepreneurial activity, Tass reported. Industrial scale miners need to be separated from parts of the grid that supply electricity to the population, Vechkanov added.

Read more: Russia's Minister of Finance Suggests Letting Banks Sell Crypto: Report

CORRECTION (Feb. 3, 12:00 UTC): Corrects first para to say Tass reported on Wednesday not Tuesday.