Russia may soon impose special electricity tariffs on crypto miners. This follows significant energy problems seen in some parts of Russia. The reason is the massive shift of mining companies after China imposed a ban on all crypto activities including prospecting.
Many conditions make Russia ideal and attractive for mining cryptocurrencies. It is one of the countries with the highest electricity production as well as energy capacities in the world. Throughout the country, energy resources are easily accessible, with 40% of electricity coming from renewable and environmentally friendly sources such as hydropower.
Some regions even achieve a surplus of 50% in the production of electricity. This includes Irkutsk Oblast, which has the lowest electricity prices in the country. Earlier this week, the Governor of Irkutsk noted that electricity consumption has increased by 159%.
In an Instagram post, he pointed out that illegal prospectors are shamelessly exploiting the region’s low electricity rates and making money from it.
Read more about the impact of the crypto miners’ exodus on electricity tariffs in Russia and find the most important economic news from around the world with our companion app Born2Invest.
Crypto miners to pay more
On Wednesday, October 13th, Russian Energy Minister Nikolai Shulginov announced that they were considering a new framework for differentiating tariffs between crypto mining and general use. He pointed out that the miners should not have access to electricity at the same price as households.
Speaking at Russian Energy Week, Shulginov argued that his ministry would ban prospectors from using electricity at the household rate. Those using electricity for mining would have to pay more to maintain the quality and reliability of the power supply.
Earlier, Irkutsk Governor Kobsev pointed out that an entire power grid was shut down because of mining, leaving residents in the dark just before winter. Concerns about exposure to mining activities have increased, with illegal prospectors bearing the brunt of the blame.
The mining industry seeks new sanctuaries
The Irkutsk region is located just 1,700 kilometers from China and is home to BitRiver, the largest green crypto mining provider in Russia. A BitRiver spokesperson explained that crypto mining has increased in lockstep with rising bitcoin prices. He linked the growth to expansions of existing mining operations and the entry of new players.
The proposal about new electricity tariffs in Russia comes just days after Kazakhstan raised energy tariffs for mining. Again, the huge increase in electricity consumption led to the decision.
Following China’s crackdown on crypto, mining has increased in many countries. The U.S. currently leads the world in mining cryptocurrencies, while Kazakhstan and Russia are third and fourth.
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