Bitcoin and crypto mining costs could rise in Russia as regions complain

View of Lake Baikal in Irkutsk Oblast, Russia. Source: Adobe / Andrey Shevchenko

Bitcoin (BTC) and cryptocurrency mining are causing power shortages in parts of Russia – and political leaders are embarking on interventions that may seek to limit the production of miners or increase their energy costs.

Through Vedemosti, Igor Kobzev, governor of Irkutsk oblast in southeastern Siberia, wrote letter to Deputy Prime Minister Alexander Novak to “complain about illicit cryptocurrency miners” operating in the region – declaring that they cause consumption peaks.

Novak was Minister of Energy from 2012 until last year, when he was appointed Deputy Prime Minister. However, he still wields considerable power over the energy industry – and there are signs his successor may be ready to respond with new tariffs for miners.

Energy prices in Siberia are notoriously low, and consistently cold temperatures for much of the year have attracted dozens of miners to and around Irkutsk Oblast, especially since China began. its mining crackdown earlier this year.

But the ministry and Novak’s successor Nikolai Shulginov appear to have accepted the concerns of Kobev and others, and may respond with further price hikes for crypto miners.

RBC reported that Chulginov said:

“In order to maintain a reliable and high-quality power supply, we believe it is necessary to prevent the consumption of electricity by miners by using energy tariffs. [intended] for the [general] population.

The Minister added that “minors should not […] make the situation worse by using reduced energy tariffs [intended for use by] the general population.

Shulginov did not say whether miners would be placed on the same band as industrial or commercial consumers – but the ministry’s plans could be hampered by the fact that Russian law does not formally recognize crypto or crypto mining under any recognizable shape.

Either way, Kobzev seems to think the concerns are very real. He wrote, Vedemosti continued, that by the end of 2021, the electricity consumption of the general population of Irkutsk oblast will be 159% higher than the 2020 figures.

The Governor also pointed out that only 1.4% of households across the region accounted for more than a quarter of total electricity consumption. During the period January-July 2021, energy consumption by the public increased by 13% and exceeded the 5 billion kWh mark.

According to a recent update of Cambridge UniversityThe Judge Business School of, the “main part” of the global Bitcoin network hashrate “is now in the United States, followed by Kazakhstan and Russia.”

University’s latest Cambridge Bitcoin electricity consumption index The data, which he says is correct “until the end of August 2021”, shows that the hashrate of the Bitcoin protocol located in Russia has now risen to over 11%, down from nearly 7% in April 2021.

China’s own hashrate data is not available, although some miners are still believed to be operating in the country. The number of minors in China, however, is expected to adjust downward in the coming months, as the regional crackdown continues.

Russian lawmakers will want to avoid following in the footsteps of neighboring Abkhazia, a de facto South Caucasian state that has been ravaged by months of political chaos and an energy crisis, with most accusing illegal crypto miners of disrupting electrical networks. Entire villages have been plunged into darkness after power surges broke down electrical equipment and substations.
Learn more:
– Putin says crypto is “not worthless” and has “a right to exist”
– No crackdown on crypto in Russia, but keep coins off Russian soil, official warns

– US becomes biggest Bitcoin mining hub after Chinese miners exodus
– Academic Says Bukele’s Bitcoin Mining Test A ‘Bad Deal’

– Nordic Bitcoin miners face a double challenge, but industry remains “quite optimistic”
– Bitcoin miners strike more nuclear deals amid climate concerns

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