A view of Lake Baikal in Irkutsk Oblast, Russia. Source: Adobe/Andrey Shevchenko
Bitcoin (BTC) and crypto mining are causing power shortages in parts of Russia – and politicians are stepping in with interventions that could aim to limit miners’ output or drive up their energy costs.
According to Vedemosti, Igor Kobtsev, the governor of Irkutsk Oblast in southeastern Siberia, has written a letter to Deputy Prime Minister Alexander Novak to “complain” about illegal cryptocurrency miners operating in the region – arguing that they are driving up consumption.
Novak served as energy minister from 2012 until last year, when he was appointed deputy prime minister. But he still wields considerable power over the energy industry – and there are signs that his successor could be ready to respond with new tariffs for miners.
Energy prices in Siberia are notoriously low, and consistently cold temperatures for much of the year have attracted large numbers of miners to the Irkutsk region and its environs, especially since China began its mining crackdown earlier this year.
But the ministry and Novak’s successor, Nikolai Shulginov, appear to have accepted the concerns of Kobev and others and may respond with new price hikes for crypto miners.
RBC reported that Shulginov stated:
“In order to maintain a reliable, high-quality power supply, we believe that it is necessary to prevent electricity consumption by miners by using electricity tariffs intended for the [general] population*.”
The minister added: “Miners must not [.] Aggravate the situation by using the discounted electricity tariffs [for the general population].”
Shulginov did not comment on whether miners would be put on the same footing as industrial or commercial consumers – but the ministry’s plans could be hampered by the fact that Russian law does not formally recognize crypto or crypto-mining in any discernible way.
Regardless, Kobzev seems to believe the concerns are very real. He went on to write, according to Vedemosti, that by the end of 2021, the population’s electricity consumption in the Irkutsk Oblast will be 159% higher than the 2020 figures.
The governor also pointed out that only 1.4% Of households in the entire region are responsible for more than a quarter of total electricity consumption. In the period from January to July 2021, the energy consumption of the population increased by 13% and exceeded the mark of 5 billion KWh.
According to a recent update from Cambridge University’s Judge Business School, the “leading share” of the global Bitcoin network hashrate “now lies in the United States, followed by Kazakhstan and Russia.”
The latest data from the university’s Cambridge Bitcoin Electricity Consumption Index, which it says is accurate “through the end of August 2021,” shows that Russia’s bitcoin protocol hashrate has now risen to more than 11%, up from nearly 7% in April 2021.
China’s own hashrate data is not available, although some miners are believed to still be operating in the country. However, the number of miners in China is likely to adjust downward in the coming months as regional crackdowns continue.
Russian lawmakers will be careful not to follow in the footsteps of nearby Abkhazia, a de facto state in the South Caucasus that has been beset by months of political chaos and an energy crisis, with most illegal crypto miners blamed for widespread disruption of power grids. Entire villages were plunged into darkness after power surges caused electrical equipment and substations to fail.