Russian region struggles to keep up with Bitcoin mining energy demands

A local energy distributor is working to recover about $800,000 from illicit cryptocurrency miners in Irkutsk Oblast.

As cryptocurrency mining activity grows increasingly common in Russia, one local region is struggling to maintain power stability amid massive inflows of new crypto mining operations.

Russia’s Irkutsk Oblast, a federal region and Russia’s major center of trade routes from China, experienced a fourfold increase in energy consumption in 2021 due to mining activities, local news agency TASS reported on Wednesday.

Yevgeny Vechkanov, head of technology and development at the local energy firm Irkutsk Electric Networks, linked the rapid growth of crypto mining operations to the major crypto rally in 2021 as well as China’s cryptocurrency ban enforced in September. “These factors exacerbated the situation, triggering energy use quadrupling compared to 2020,” he said.

Vechkanov added that local people have been installing crypto mining farms at home and at their dachas en masse, triggering increased energy consumption and frequent power grid outages.

Oleg Prichko, director at Baikal Energy Company, also attributed the power consumption surge to increasingly popular local mining operations. He claimed that as many as seven Boeing 737 aircrafts “fully loaded with mining devices from China” arrived in Irkutsk during the first two weeks of January.

The Head of the Criminal Investigation Department of the Main Directorate of the Ministry of Internal Affairs, Andrey Zhbanov, said that some Irkutsk residents even set up mining farms in dog houses. “Laugh all you want, but it’s warm for the dogs. Mining causes a lot of heat, which creates double benefits,” he noted.

The latest report comes months after Irkutsk authorities first reported on a sharp energy use spike in October 2021, linking the increase to the massive growth of mining operations due to the exodus of miners from China. The Russian Energy Ministry previously announced that it was working on a new framework to differentiate tariffs between general usage and crypto mining in late 2021.

Related: Russia houses $200B worth of crypto, Kremlin estimates

Irkutskenergosbyt, a major local power distributor, reportedly filed a total of 137 lawsuits against customers using subsidized electricity to mint digital currencies in mining facilities set up in basements and garages. The company reportedly expects to recover 63 million Russian rubles in damages ($820,000).

The news comes shortly after Russian President Vladimir Putin said that Russia’s surplus of electricity provides the country a “competitive advantage” in crypto mining. In November 2021, the Russian State Duma created a working group to work on regulations designed specifically for the crypto mining sector.