The main service company in Irkutsk is seeking to raise nearly $ 800,000 from owners of cryptocurrencies that allegedly caused a spike in electricity consumption in the Russian region. The supplier accuses the miners of burning cheap domestic electricity into what is in fact a commercial activity.
Power Service Takes Crypt Miners to Court
Irkutskenergosbyt, the local electricity distributor in Irkutsk Oblast, has filed 137 lawsuits against customers using subsidized electricity to monetize digital currencies in mining facilities set up in basements and garages. Taking the cases to court, the utility hopes to recover 63 million Russian rubles (more than $ 790,000) in compensation, Tass reported citing its director, Andrey Kharitonov.
The company says these domestic miners are engaged in business activities while paying for their electricity at the rates for the population, which are four times lower than commercial tariffs. The owners of the underground crypto farms are also increasing the load on the grid in residential areas leading to breakdowns and malfunctions.
In 2021 alone, more than 1,200 cases of “gray” mining have been identified, Kharitonov told the news agency. Of the 137 lawsuits filed, 19 claims in the amount of 21 million rubles were satisfied. All other claims are still being considered and no cases have been lost so far, he detailed.
The executive pointed out that cryptocurrency mining significantly increases the volume of electricity consumed in the region. While in 2020, Irkutskenergosbyt customers used approximately 7 billion kilowatt-hours (kWh), in 2021 the figure approached 8 billion kWh. At the same time, the number of private households and apartment buildings remained almost unchanged.
The electricity service recorded the highest concentration of mining properties in the Irkutsky and Shelekhovsky districts. Electricity tariffs in these rural areas are lower than those in the city of Irkutsk. At only 0.86 rubles ($ 0.01) per kWh, households in these regions have access to the cheapest electricity in Russia while businesses have to pay 3.6 rubles per kWh.
The miners who lost in court will now have to not only cover the price gap for the power they have already consumed, but also sign new contracts with Irkutskenergosbyt at commercial rates. Their region became known as the “mining capital of Russia” after a large amount of mining equipment was imported from China when Beijing launched a nationwide crackdown on the industry in May last year.
In October 2021, Irkutsk Oblast Governor Igor Kobzev joined growing calls to recognize cryptocurrency mining as a form of corporate activity and to make miners pay higher electricity tariffs and taxes. In December, the federal government in Moscow allowed Russian regions to determine local electricity tariffs in residential areas.
The future of mining in Russia, among other crypto-related activities, is still undecided. A task force at the State Duma has been given the task of preparing legislation to fill the regulatory gaps remaining after the adoption of the Digital Finance Assets Act. Last week, the Central Bank of Russia proposed a ban on bitcoin mining as part of a cover-up cryptocurrency ban but media reports revealed that its tough stance is not gaining support from other government institutions.
Do you expect Russia to legalize cryptocurrency mining and introduce higher electricity rates for miners? Tell us in the comments section below.
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