The cost of electricity for mining centers may increase sharply
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The Ministry of Energy has published its proposals for a multiple increase in electricity transmission tariffs for mining centers. As Kommersant expected, the tariff for miners could increase at least twice, and at most five times. Moreover, the tariff will be increased only in areas with a shortage of energy capacity. The price increase will most likely occur in the south of the Irkutsk region, where regulators are already unable to connect new consumers to the power grid. Representatives of the mining industry have criticized the initiative, calling it an “ineffective” and “oppressive” approach.
The Ministry of Energy has published a draft government resolution, which involves the introduction of new tariff rules for mining centers (legal entities). As Kommersant expected (see “Kommersant” dated September 20), the ministry proposes to increase electricity transmission tariffs for industrial centers for the extraction of cryptocurrency by two to five times. As a result, the final price of electricity for them will increase (consists of the transmission tariff, the wholesale price of electricity and the sales markup). The new rules are proposed to be applied only in areas with energy shortages, as well as in “a constituent entity of the Russian Federation or a separate territory thereof, within the boundaries of which a regime with a high risk of disruption of power supply has been declared.” The changes will not affect tariffs for the population.
New rules may be introduced in the south of the Irkutsk region, where regulators are already unable to connect a number of new electricity consumers to the power grid due to energy shortages. By 2029, the total deficit in the southeast of Siberia (south of the Irkutsk region, Buryatia and Trans-Baikal Territory) could reach 1.23 GW. To solve the problem, a new generation will have to be built. The cost of construction of 1.23 GW could amount to up to 518.2 billion rubles, Interfax reported with reference to the decision of the government commission on the development of the electric power industry. The maximum specific CAPEX will be 423 thousand rubles. for 1 kW, and the basic yield is 12%.
The Irkutsk region is the most popular region for miners due to the lowest electricity tariffs.
Thus, according to Time2Save estimates, in the Irkutsk region the average final price of 1 kWh for legal entities on high voltage (HV) in 2023 was about 3 rubles. (excluding VAT), and in the summer the figure dropped to 2.7 rubles. The Ministry of Energy wants to increase tariffs so that miners, at least during the construction of generation, move to another part of the region or to another region altogether, Deputy Minister of Energy Pavel Snikkars explained in an interview with Kommersant (see interview dated November 24).
According to the draft resolution, new tariffs will be established for legal entities included in a special register of mining farms. The list of miners will be maintained by a “collegial interdepartmental body of a constituent entity of the Russian Federation.” The commission will enter a legal entity into the register if, “based on the results of an inspection of the facility,” it discovers mining equipment in the legal entity’s possession. The document notes that mining equipment is “computing devices and hardware and software” with the help of which mathematical calculations occur to “create digital currency or receive rewards in digital currency.”
Representatives of the mining industry criticize the initiative of the Ministry of Energy. Industrial data centers for mining were connected to power grids in accordance with the law, says Sergei Bezdelov, director of the Industrial Mining Association:
“There is an attempt to take repressive measures against industrial mining entities operating within the legal framework, which should force the business to cease its activities.”
Mr. Bezdelov considers “such a tough approach ineffective.” He proposes to reduce the energy deficit in other ways, for example, “by conducting an audit of existing contracts and technical conditions for the technological connection of objects to power grids, checking the legality of the import of computing equipment into the Russian Federation,” as well as by differentiating household electricity tariffs.
The measures proposed by the resolution are aimed at increasing the cost of mining, notes Sergei Sasim, director of the Center for Electric Power Research at the National Research University Higher School of Economics: “At the same time, the increasing coefficient to the tariff for electricity transmission is the same for the entire time of electricity consumption. The final unregulated price, in turn, varies depending on the time of day. It is quite possible that the proposed increase in the tariff for electricity transmission will not in all cases lead to unprofitable mining activities. Especially if the market value of cryptocurrencies increases.” However, such use of tariff instruments may increase the attractiveness of gray mining in the household sector at tariffs for the population, the analyst warns.
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