Russian Region Struggling With Energy Demand For Bitcoin Mining

Mining cryptocurrencies like Bitcoin is becoming more and more common in Russia. One local region is struggling to maintain energy stability amid a massive influx of new crypto mining activity.

Quadruple of Energy Consumption

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

Yevgeny Vechkanov, head of technology and development at local energy company Irkutsk Electric Networks, linked the rapid growth of crypto mining activities to the major crypto rally in 2021. The same is true of China’s cryptocurrency ban enforced in September. He said:

“These factors exacerbated the situation, causing energy consumption to quadruple from 2020.”

Vechkanov added that local people have massively installed crypto mining farms at home and in their dachas. As a result, energy consumption has increased and the electricity grid has often failed.

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Increasing popularity of mining activities

Oleg Prichko, director of Baikal Energy Company, also attributed the increase in power consumption to increasingly popular local mining activities. He claimed that as many as seven Boeing 737 planes “loaded with mining equipment from China” arrived in Irkutsk in the first two weeks of January.

The head of the criminal investigation division of the Interior Ministry’s main directorate, Andrei Zhbanov, said some residents of Irkutsk have even set up mining farms in dog houses. Prichko said the following:

“Laugh all you like, but it’s hot for the dogs. Mining generates a lot of heat, which has a double benefit.”

The latest report comes months after Irkutsk authorities first reported a sharp spike in energy consumption in October 2021, linking the increase to the massive growth in mining activity. The cause was the exodus of miners from China. The Russian Ministry of Energy previously announced that it was working on a new framework by the end of 2021. The aim was to differentiate the rates. There should be a distinction between general use and crypto mining.

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

This news comes shortly after a statement by Russian President Vladimir Putin. He said Russia’s electricity surplus gives the country a “competitive advantage” in mining cryptos. In November 2021, the Russian State Duma created a working group. The group is focused on working on regulations designed specifically for the crypto mining sector.

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