new energy tariffs

Exodus of Chinese crypto miners into Russia prompts new energy tariffs

Russia may soon slap cryptocurrency miners with special energy tariffs. 

This follows significant power issues witnessed in Russia and neighboring countries after a massive relocation of miners fleeing crypto mining bans and prohibitions in China. 

Many conditions make Russia ideal and attractive for cryptocurrency mining. Standing among the top five nations by electricity production globally, the country has a massive energy production capacity. Across the nation, energy resources are easily accessible, with 40% of their power coming from renewable and eco-friendly sources like hydro. 

Some regions even attain a 50% surplus in energy production. Areas that have reported explosive electricity consumption growth include Irkutsk Oblast, which features the lowest electricity fees in Russia. Earlier this week, Igor Kobsev, the Irkutsk Governor, noted that electricity consumption had risen by 159%. 

In an Instagram post, Kobsev pointed out that illegal miners were shamelessly taking advantage of the region’s low electricity tariffs and making money out of it. 

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Crypto miners to pay more

On Wednesday, the energy minister for Russia, Nikolai Shulginov, announced they’re looking into a new framework for differentiating tariffs between cryptocurrency mining and general usage. He pointed out that crypto miners should not have electricity access at the same price as households. 

Speaking at the Russian Energy Week, Shulginov argued that the Ministry of Energy would prohibit miners from using electricity at residential tariffs. Miners would have to pay more to maintain the quality and reliability of the power supply. 

Earlier, Governor Kobsev had pointed out that underground cryptocurrency miners had compromised an entire electricity grid, leaving residents in the dark in the dead of winter. Concerns about the strain of crypto mining activities have risen, with illegal miners bearing most of the blame.

Miners seeking new havens

The Irkutsk region is only 1,700 kilometers from China and is home to BitRiver, the largest hosting provider for green crypto mining in Russia. Bitriver’s public relations director explained that crypto mining has increased in tandem with rising bitcoin prices. He associated the growth with expansions in existing mining operations and the entry of new players. 

Russia’s special energy tariffs development comes only days after Kazakhstan escalated energy tariffs for crypto mining operations. Like Russia, enormous electricity consumption associated with crypto mining processes led to the decision. 

Crypto mining activities in countries like the US, Kazakhstan, and Russia have increased following China’s crackdown. The US is currently the world leader in cryptocurrency mining volume, while Kazakhstan and Russia hold third and fourth positions.