Power providers in the Siberian crypto mining hotspot of Irkutsk have discovered an illegal mining “farm” operating on their own property.

The Irkutsk Region Prosecutor-General’s Office posted on VK, explaining that an unnamed Irkutsk-based “electric grid supply organization” was “found illegally providing a plot of land” to crypto miners.

Siberian Power Grid Company ‘Leased Land to Crypto Miners’

The prosecutors explained that the state had set aside the plot to help provide “public utilities.”

Instead, however, the unnamed company leased the land to crypto miners, who built a “mining farm” on the property.

The office said that it had fined the power provider 330 thousand rubles (over $3,120) and censured the firm.

Prosecutors have also opened an administrative case against the power company.

Russia’s Ongoing Battle with Illegal Crypto Mining

In recent years, Russia has faced a significant challenge in controlling illegal crypto mining, particularly in its resource-rich Siberian regions. Despite government efforts to crack down on illicit mining operations, the sector remains vibrant due to the region’s cheap energy costs and favorable climate for mining operations. As a result, power grids have faced increasing instability, particularly in places like Irkutsk, where crypto miners have been blamed for power outages. Let’s take a closer look at the complexities surrounding Russia’s illegal mining issue and explore emerging alternatives.

The Allure of Siberia for Crypto Miners

Siberia’s appeal to crypto miners is undeniable. The region offers some of the lowest energy costs in Russia, along with harsh winter temperatures that naturally help with cooling mining rigs. These factors make it an attractive location for miners looking to maximize profitability.

However, the situation has led to grid instability and power outages, particularly in regions like Irkutsk. Over the years, the strain on local infrastructure has drawn increasing attention, with many of these outages being blamed on the illegal mining farms proliferating in the area.

Moscow’s Response: Bans and Crackdowns

To address the growing crisis, Moscow has implemented temporary bans on crypto mining in several parts of Siberia. These bans, however, have had little impact on the underground mining operations that continue to thrive in the region. Irkutsk authorities, in particular, have ramped up efforts to crack down on offenders, but the scale of the problem remains overwhelming.

Despite these efforts, the low-cost, low-regulation environment of Siberia continues to attract miners. For many, the financial incentives outweigh the risk of government intervention, making it difficult for authorities to put a significant dent in the illegal mining activities.

New Alternatives: Moving Beyond Southern and Eastern Siberia

With the ongoing difficulties in Southern and Eastern Siberia, some developers are beginning to look elsewhere for new opportunities to host legal crypto mining operations. A notable example comes from the Tyumen region, where a Bitcoin mining farm located in Zavodoukovsk is currently for sale.

The farm, housed on a 20-acre plot, includes a 550-square-meter building and is equipped with a 150 kWh power supply and 40 ASIC mining rigs. The developers claim the farm can mine 0.266 BTC per month, and it is being offered for around $95,000. This price also includes a very competitive power rate of just $0.02 per kW, which is significantly lower than what many larger mining operations are paying.

This venture reflects a growing trend in Russia, with various developers assembling ready-made mining facilities for those seeking to set up shop in areas with more favorable conditions for crypto mining. As new mining hubs emerge, it’s likely that these areas could become new hotspots for miners looking to avoid the regulatory scrutiny of Siberia.

Emerging Crypto Mining Hotspots Across Russia

Beyond Tyumen, other regions in Russia are beginning to position themselves as viable alternatives to Siberia for crypto mining. The Komi Republic, for example, is making strides in developing new data centers to support the mining industry. In September, the governor of Komi, Vladimir Uyba, announced that two of the planned 15 new data centers were already under construction in Mikun and Sindor.

The state-owned gas giant Gazprom is also getting in on the action. Its crypto mining subsidiary is currently working on a massive mining facility in Veliky Novgorod, which is set to house 5,000 mining rigs. Once completed, this facility is expected to reach full capacity by 2028, with an impressive $452.4 million budget allocated for the project. This investment signals not only the state’s backing of the crypto mining industry but also the growing legitimacy of the sector within Russia.

The Big Players: BitRiver and Eastern Siberia’s Continuing Influence

Despite the rising popularity of other regions, some firms continue to focus their efforts on Eastern Siberia. BitRiver, Russia’s largest industrial crypto mining company, is building a massive new data center in Buryatia. The 100MW facility will be the largest of its kind in the Republic of Buryatia and the Far Eastern Federal District.

BitRiver’s commitment to Eastern Siberia highlights the continued importance of the region in the broader Russian crypto mining ecosystem. With state support and increasing institutional interest, the region remains a key player in Russia’s mining landscape, even as other regions attempt to attract miners with more favorable conditions.

Looking Ahead: The Future of Crypto Mining in Russia

As Russia continues to grapple with illegal mining and its impact on the power grid, the emergence of alternative mining hubs offers a glimpse into the future of the industry. While Siberia remains a dominant force in the market, regions like Tyumen, Komi, and Veliky Novgorod are positioning themselves as viable alternatives for miners seeking more stable and regulated environments.

In the coming years, we may see a significant shift in the geographic distribution of Russia’s crypto mining operations, as both developers and large institutional players look to capitalize on the opportunities provided by lower energy costs and more favorable regulatory frameworks. However, the challenges surrounding illegal mining are unlikely to dissipate anytime soon, as the incentives for underground operations remain strong.