Irkutsk’s main utility company is looking to collect around $800,000 from the owners of a crypto farm that has reportedly increased electricity consumption in Russian territory. The supplier accuses the miners of burning cheap household electricity, which is actually a commercial activity.
Power Utility Takes Crypto Miners to Court
Irkutskenergosbyt, a local electricity distributor in Irkutsk Oblast, has filed 137 lawsuits against customers using subsidized electricity to mine digital currencies at mining facilities set up in basements and garages. Taking the cases to court, the utility expects to recover 63 million Russian rubles (over $790,000) in compensation, Tass quoted its director Andrey Kharitonov as saying.
The company says that these domestic miners are engaged in entrepreneurial activities while paying electricity for the population at a tariff that is four times lower than commercial rates. Owners of underground crypto farms are also increasing the load on the grid in residential areas leading to breakdowns and outages.
In 2021 alone, more than 1,200 cases of ‘gray’ mining were identified, Kharitonov told the news agency. Of the 137 lawsuits filed, 19 claims in the amount of 21 million rubles were satisfied. All other claims are still being considered and no cases have been lost so far, he elaborated.
The executive pointed out that cryptocurrency mining significantly increases the amount of electrical energy consumed in the sector. While in 2020, Irkutskenergosbyt’s customers used about 7 billion kilowatt-hours (kWh), in 2021 the figure swelled to closer to 8 billion kWh. At the same time, the number of private houses and apartment buildings has remained almost unchanged.
The power utility recorded the highest concentration of mining farms in Irkutsky and Shelekhovsky districts. Electricity rates in these rural areas are lower than in the city of Irkutsk. At just 0.86 rubles ($0.01) per kWh, homes in these parts of the region have access to the cheapest electricity in Russia, while businesses pay 3.6 rubles per kWh.
Miners who lose in court will now not only have to cover the price difference for the electricity they have already consumed, but also sign new contracts with Irkutskenergosbyt at commercial rates. Their region became known as the “mining capital of Russia” after large quantities of mining hardware were imported from China, when Beijing launched a nationwide crackdown on the industry in May last year.
In October 2021, the governor of Irkutsk Oblast, Igor Kobzaev, joined growing calls to recognize cryptocurrency mining as a type of entrepreneurial activity and to pay high electricity fees and taxes to miners. In December, the federal government in Moscow allowed the Russian Federation to set local electricity tariffs in residential areas.
The future of mining in Russia among other crypto-related activities is still uncertain. A working group in the State Duma is tasked with preparing legislation to fill the regulatory gaps remaining after the adoption of the Law “On Digital Financial Assets”. Last week, the Central Bank of Russia proposed a ban on bitcoin mining as part of a blanket crypto ban, but media reports showed that its radical stance was not receiving support from other government institutions.
Do you expect Russia to legalize crypto mining and introduce higher electricity rates for miners? Tell us in the comments section below.
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