With the introduction of new regulations regarding cryptocurrency mining in Russia, local officials have identified unauthorized crypto mining operations in the southern Republic of Dagestan. The regional prime minister has called for increased law enforcement efforts to combat illegal mining activities, particularly as the area faces challenges in managing electricity usage.
Illegal Crypto Mining Sites Discovered
On Tuesday, the news agency Reuters reported that authorities in Dagestan are demanding stronger measures against unauthorized crypto mining operations within the region. Abdulmuslim Abdulmuslimov, the prime minister of Dagestan, urged law enforcement to focus more on the innovative tactics employed by miners to remain operational.
During a meeting to plan energy, housing, and utilities preparations for the winter season, the regional leader revealed new concealment techniques used by illegal mining farms, indicating that several mining operations have been discovered subterranean:
Operators of illicit cryptocurrency mining setups are devising new strategies to ‘evade’ the law – they are establishing mining farms underground.
According to the report, officials presented footage of a makeshift subterranean space in the Sergokalinsky district. The entrance is a narrow square at ground level, easily camouflaged, with a ladder leading down into the cavern. Upon descent, officials located over 15 mining units accompanied by numerous fans for cooling the machinery.
Inside the underground facility utilized for illegal crypto mining. Source: Mario Nawfal on X
Abdulmuslimov highlighted that this was just one of numerous underground crypto mining sites in the region. Furthermore, he noted that miners are utilizing “mobile installations” for their operations, facilitating easier relocation.
A New Era of Mining in Russia
As reported by Bitcoinist, crypto mining has recently received legalization in Russia. In August, President Vladimir Putin enacted a new law to provide a legal framework for the sector, aiming to spearhead innovation while combating illegal activities.
The legislation is set to take effect on November 1, 2024, permitting registered businesses and individuals to operate legally. Under the new regulations, crypto miners and mining companies will hold “exclusive rights” to conduct mining within the country.
Nevertheless, individuals who stay within the energy consumption thresholds established by the Russian government will be allowed to mine without the need for registration. It’s important to highlight that the crackdown on crypto mining operations has continually posed challenges in the Republic of Dagestan.
According to a report by The Insider described, police operations against mining centers have intensified in the region since late 2023. The report suggests that Dagestan “is likely leading in all of Russia in terms of the number of reported electricity thefts” used for crypto mining activities, and officials believe that mining operations are a significant contributor to the ongoing electrical issues due to their excessive consumption.
Ultimately, the prime minister of Dagestan has instructed law enforcement to enforce stricter measures, asserting that the illegal mining sites have led to power outages, including a recent fire at a substation that left multiple districts without electricity over a week ago.
Bitcoin is currently trading at $63,599 on the weekly chart. Source: BTCUSDT on TradingView
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