Amid novel cryptocurrency mining legislation in Russia, local authorities have uncovered illegal cryptocurrency mining farms in the southern Republic of Dagestan, with the region’s prime minister urging law enforcement to step up efforts to combat illegal mining operations as the region struggles with electricity consumption.
Underground cryptocurrency mining centers shut down
On Tuesday, the Reuters news agency reported that reported that Dagestan authorities have called for more decisive action against illegal cryptocurrency mining centers in the region. Abdulmuslim Abdulmuslimov, Prime Minister of Dagestan, has asked law enforcement agencies to pay more attention to the evolving methods that miners are constantly developing to operate.
At a meeting dedicated to preparing energy, housing and municipal facilities for winter, the regional leader uncovered novel methods of concealing unregistered mining holdings, revealing that several mining centers had been discovered underground:
Owners of illegal cryptocurrency mining facilities are inventing novel methods to “circumvent” the law – they are installing underground mining farms.
According to the report, authorities showed a video of a makeshift underground cave in the Sergokalinsky district. It shows that the entrance is a narrow square at ground level that can be easily disguised, with a ladder leading into the cave. After descending, authorities found more than 15 mining machines with dozens of fans cooling computers.
Inside of the underground cave used for illegal crypto mining. Source: Mario Nawfal on X
Abdulmuslimov noted that this is one of several underground cryptocurrency mining farms in the region. He added that miners also employ “mobile installations” in their farms, which allows them to move around more easily.
A Fresh Era of Mining in Russia
As Bitcoinist reports, cryptocurrency mining was recently legalized in Russia. In August, Russian President Vladimir Putin signed a novel law to give the sector legal status in the country in an attempt to be at the forefront of innovation and crack down on illegal operations.
The novel regulations will go into effect on November 1, 2024, allowing registered companies and individuals to legally operate. Under the novel law, cryptocurrency miners and mining companies will have “exclusive rights” to mine cryptocurrencies in the country.
However, those who do not exceed the energy consumption limits set by the Russian government will be allowed to mine without registration. It is worth noting that repression against cryptocurrency mining farms is an ongoing problem in the Republic of Dagestan.
The Insider Report detailed that police raids on mining facilities have become more constant in the region since tardy 2023. The investigation claims that Dagestan “is most likely the first country in the whole of Russia in terms of the number of detected thefts of electricity” used for cryptocurrency mining, and authorities believe mining operations are responsible for the electricity problems due to their high consumption.
Ultimately, Dagestan’s prime minister ordered law enforcement agencies to tighten measures, saying illegal mining facilities were responsible for power outages, including a recent fire at a substation that left several districts without power more than a week ago.
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