Crackdown Initiated On Illegal Cryptocurrency Mines In Dagestan

Authorities in Dagestan, a republic of Russia, are stepping up efforts to eliminate illegal underground cryptocurrency mining operations, attributing regional power outages and electricity theft to these activities. Amid ongoing electricity shortages, local officials are urging law enforcement to increase actions against these covert setups.

A Tricky Operation

Recent reports revealed the discovery of multiple hidden crypto mining facilities. The Dagestan Prime Minister, Abdulmuslim Abdulmuslimov, has called for stricter measures, highlighting that miners are constantly innovating ways to conceal their operations. During a recent meeting, he mentioned that several unregistered mining farms have been located in underground caverns, making them more challenging to identify.

Footage was shown of a clandestine operation in the Sergokalinsky district, where a small opening at ground level led to a cavern containing over 15 mining machines cooled by fans. Abdulmuslimov pointed out that this was just one of many similar sites, noting that miners are increasingly using mobile installations to facilitate relocation.

The Legal Way

To regulate the sector, Russia has recently legalized cryptocurrency mining. In August 2024, President Vladimir Putin enacted a law granting legal status to the industry, which will take effect on November 1st, 2024. This legislation allows registered companies and individuals to mine legally, granting exclusive rights to registered miners, while those below government-set energy consumption limits can mine without registration.

However, Dagestan remains a hotspot for illegal crypto mining, with ongoing crackdowns on electricity theft. Reports indicate a rise in police raids in the region since late 2023, and Dagestan is believed to have the highest incidence of electricity theft related to mining in the country. Authorities suspect that these operations are responsible for significant electrical issues, including a recent fire at a substation that left parts of the area without power for several days.