Russian power firm: illegal crypto miners steal $9.5M

Russian power firm Rosseti announced that it plans to fight unauthorized crypto mining operations.

According to a Dec. 22 report by local news outlet Prime, Rosseti is afraid that record high Bitcoin (BTC) prices may spur a new wave of illegal cryptocurrency mining operations stealing electricity and threatening to disrupt Russia’s electrical grid. 

“The growth in the cost of cryptocurrencies is undoubtedly associated with an increased interest in mining,” a company representative said. “In this regard, we could see growth in the number of unauthorized miners whose activity not only leads to economic damage (losses) for energy companies, but also creates a threat of grid congestion and risk of disruption.”

Beginning with the 2017 “crypto boom,” Rosseti started noticing abnormal jumps in electricity consumption in numerous Russian regions. The firm identified unauthorized cryptocurrency mining farms and estimated the damage to be over 718 million rubles—about $9.5 million—a significant part of which has already recovered through court procedures.

The “black” miners are known to do more than just tap into power lines. Illegal Bitcoin operations actually build their own transformer stations.

Rosseti reportedly goes to great lengths to fight illegal mining operations and developed systems to identify and suppress their activities. Data collected by the firm has already been transferred to local law enforcement, and criminal cases are being brought against the perpetrators—who reportedly risk serving prison time.

A complicated relationship

For many years after Bitcoin’s launch little over ten years ago, miners around the world saw little regulation or even attention by governments. Most of them enjoyed the lack of oversight since it allowed them to manage their operations freely.

As the value and public awareness of the cryptocurrency market increased, and as Bitcoin mining farms’ staggering power consumption began to equal that of whole countries—they are currently using more than the Czech Republic, according to Digiconomist— authorities started paying more attention to miners. This attention soon translated to regulation and actions taken against those who do not conform with the new rules.

Still, after initially reacting to crypto mining with hostility—like in the case of Plattsburg, N.Y., which outright banned the establishment of new farms—governments started to view the activity more favorably, presumably as a source of more taxable income. This is confirmed by the U.S. Department of Energy’s decision to grant Canadian crypto mining firm DMG Blockchain Solutions an energy export license.

As Modern Consensus reported in late August, venture capital firm Digital Currency Group launched an initiative meant to create greater access to digital asset mining in North America.