Crypto Mines Busted: Authorities Uncover Underground Mining Farms In Russia

Amid the new legislation for crypto mining in Russia, local authorities have uncovered illegal crypto mining farms in the southern Republic of Dagestan. The regional prime minister urged law enforcement to increase their efforts to tackle unlawful mining operations as the region struggles with electricity consumption.

On Tuesday, news media outlet Reuters reported that Dagestan authorities have called out for stronger actions against illegal crypto mining centers in the region. Abdulmuslim Abdulmuslimov, Dagestan’s prime minister, asked law enforcement to pay more attention to the evolving methods miners continuously develop to operate.

At a meeting to discuss preparations for energy, housing, and utilities facilities for winter, the regional leader uncovered the new hiding methods of unregistered mining farms, revealing that several mining centers have been discovered under the ground:

 The owners of illegal cryptocurrency mining installations are coming up with new methods of ‘circumventing’ the law – they install mining farms underground.

Per the report, authorities showed a video of a makeshift underground cavern in the Sergokalinsky district. It shows that the entry is a narrow square at ground level, which can be easily disguised, with a ladder leading to the cave. After descending, authorities found over 15 mining machines with dozens of fans cooling the computers.

Abdulmuslimov pointed out this was one of several underground crypto mining farms in the region. Moreover, he shared that miners also use “mobile installations” for their farms, allowing them to move more easily.

As reported by Bitcoinist, crypto mining was recently legalized in Russia. In August, Russia’s President Vladimir Putin signed a new law to give the sector a legal status within the country, attempting to be at the forefront of innovation and tackle illegal operations.

The new legislation will go into effect on November 1, 2024, allowing registered companies and individuals to operate legally. Under the new law, crypto miners and mining companies will have the “exclusive rights” to mine in the country.

However, individuals who do not exceed the energy consumption limits set by the Russian government will have the right to mine without registering.  It’s worth noting that the crackdown on crypto mining farms has been an ongoing issue in the Republic of Dagestan.

A report by The Insider detailed that police raids on mining centers had become more frequent in the region since late 2023. The investigation claims that Dagestan “is most likely first in all of Russia when it comes to the number of detected electricity thefts” used for crypto mining, and authorities consider that mining operations are responsible for the electrical problems due to their high consumption.

Ultimately, Dagestan’s prime minister ordered law enforcement to toughen the measures, alleging that the illegal mining centers have caused electrical outages, including the recent fire at a substation that left several districts without power over a week ago.