In Russia, Some Crypto Miners Operate Underground

MOSCOW (Reuters) – The southern Russian republic of Dagestan has announced the need for stricter measures against cryptocurrency miners who are reportedly causing electricity shortages and attempting to bypass regulations by establishing underground mining operations.

In recent years, cryptocurrency miners have faced increasing scrutiny globally due to the significant computing power required to solve complex problems, which involves specialized hardware that operates continuously and consumes substantial amounts of electricity.

Dagestan’s local prime minister, Abdulmuslim Abdulmuslimov, emphasized that authorities must focus more on illegal crypto mining activities, especially following a substation fire in the capital triggered by a surge in power consumption linked to miners.

"The operators of illegal cryptocurrency mining setups are developing new strategies to evade the law—they are building mining farms underground," Abdulmuslimov stated.

Government officials in Dagestan released video footage of investigators examining a crypto mining facility located in a makeshift underground chamber, equipped with numerous fans for cooling the machinery.

Legislation on cryptocurrency mining, which has been signed by President Vladimir Putin, is set to take effect under specific conditions starting November 1, 2024. A special registry will be managed by the finance ministry for companies involved in cryptocurrency mining, and individuals who mine digital currencies will be required to provide relevant information to the country’s financial monitoring authorities.