The Ministry of Energy decided to make life more difficult for cryptocurrency miners: who will win?

Experts explain what consequences the authorities want to avoid

Cryptocurrency mining should not be subject to the right of non-discriminatory access to power grids. Energy Minister Nikolai Shulginov announced this at the Eastern Economic Forum (EEF). First of all, industrial or social facilities, as well as housing and communal services complexes, should be connected to the power grid, and only then access should be opened to miners. MK found out from experts why the authorities’ attitude towards cryptocoin miners has changed and what such decisions can lead to.

As Shulginov pointed out, there are now difficulties with electricity in South-Eastern Siberia due to the fact that miners are quickly expanding production. When socially significant objects apply for connection, they do not always have enough electrical resources. “We don’t just want, but we persistently propose to exclude miners from non-discriminatory access altogether, or at least temporarily,” said the head of the Ministry of Energy. “This way, we can first connect industrial, social facilities, housing and communal services, and then mining production can begin.” At the same time, Shulginov does not oppose cryptocurrency mining where there is excess capacity, but believes that this activity must first be legalized.

The minister’s words caused controversy among cryptocurrencies. According to Oleg Ogienko, director of government relations at BitRiver, the situation described by Shulgin is typical only for unscrupulous market participants who connect to energy networks at the tariff for the population, and also repeatedly and significantly exceed the declared consumption volumes. Restricting industrial miners in non-discriminatory access to electrical networks neutralizes Russia’s natural advantages in mining and can put an end to the development of this industry in our country, the expert emphasized.

He recalled that our country is an extremely attractive region for mining, since it has an excellent climate, which allows you to save on cooling equipment; a wide choice of areas (the ruins of Soviet industry are excellent for equipping mining centers); low, in comparison with other countries, cost of electricity.

“Let’s add to this set the shallow awareness of the authorities about the principles of mining and the electricity consumption of mining installations, as well as the lack of effective tools for tracking illegal miners,” Roman Nekrasov, co-founder of the ENCRY Foundation, continues the conversation. “And all this in the absence of a full-fledged legal framework for regulating the market for the extraction of digital assets in the Russian Federation: that is, even if you are caught, it is not very clear what exactly to do with you and how to prove guilt.” Well, the “cherry on the cake” is the proximity to China, which remains the largest supplier of mining equipment. As a result, Russia is becoming an extremely attractive country for the migration of miners. According to Nekrasov, the increase in voltage on the power grid is associated precisely with the increased interest of cryptocurrency-mining businessmen in the Russian Federation.

As Alexander Frolov, Deputy General Director of the Institute of National Energy, pointed out, over the past 2.5 years the state has been working to bring miners out of the “gray zone” and force them to register as legal entities so that they do not work at the tariff that is established for ordinary households . “If such enterprises are not connected to the networks, then they will again begin to go into the “gray zone,” however, I would not exaggerate this problem due to the fact that the peak of popularity of mining activity has passed,” the expert assures. Previously, our authorities feared a repetition of the situation that arose earlier in Kazakhstan. There, miners, forced out of China by regulators and moving to this Central Asian republic, became a big problem: their work led to power outages. In Russia, a repetition of such a scenario, of course, is hardly possible: the situation in our electricity supply is many times better than in Kazakhstan. Nevertheless, this is a rather striking episode that shows what can happen if a large number of large consumers appear very quickly in the region, Frolov emphasized. The very formulation of the question by the Ministry of Energy suggests that the authorities want to put an end to the dispute about what is more important: preventing miners from leaving the “gray zone” and collecting taxes from them, or stimulating economic and social development in the regions through quick access to power grids. However, without legislative registration, everything will remain only at the level of good wishes.

Published in the newspaper “Moskovsky Komsomolets” No. 29112 dated September 12, 2023

Newspaper headline:
Current Thieves